Kids and Credit Cards - Who Is to Blame?
March 28th, 2008 by Ana
Sometimes I get comments on posts that make me stop and do some serious thinking. If I think long and hard enough, I end up writing a whole ‘nother post on the subject. Once again, I find myself in this situation, with a statement from first-time commenter klippies on my post about credit card offers for minors:
I read a lot of pf blogs and are always amazed that people blame the banks and the credit card companies for everything. (…) Do not always blame someone else for your bad choices. Nobody is forcing a student or anyone else to apply for credit cards or to use them without being able to pay the balance. Use common sense when dealing with money.
This has made me stop and think: Who is to blame when the combination of college kids and credit cards turns out badly? Or the combination of military kids and loans turns out ugly and in the first sergeant’s office? Those two groups are highly targeted by credit card and loan companies to the point it is nauseating.
- Is it the kids’ (young adults, barely over 18 years old) fault for being naive and uneducated in the ways of handling money and credit?
- Is it the credit card companies’ and loan places’ fault for taking full advantage of this naivete?
- Is it the kids’ parents’ fault for not teaching what they might or might NOT know about handling money?
- Is it the schools’ fault for not including sound financial principles in the curriculum?
- Is it the government’s fault for not regulating this?
- Is the blame somewhere in the middle of all these? With everyone having a share in the fault?
- Is it no one’s fault because (excrement) happens?
This is a really touchy subject, because any time fingers are pointed, someone gets defensive as a knee-jerk reaction. I know I got a bit defensive when I first read klippies’ final sentence:
Maybe common sense kicked in late for you, but at least you fixed your behaviour (the banks did not change theirs).
Yes, common sense waited until I was almost 34 years old to slap me upside the head. I knew I didn’t like credit cards, and knew I shouldn’t use them … but I also didn’t know how and what to do to rid myself of them. I didn’t know any other way other than what I saw on the television and in the ads and what my parents and friends did.
I don’t think I have a straight answer to this. Maybe I need to think on the subject a bit more. I am certainly interested in hearing YOUR opinion on this subject! Who is to blame when kids and credit cards (or loans) turns out to be a very bad situation?
Posted in college, credit cards |
March 28th, 2008 at 9:50 am
Well, I feel honored that my comment provoked a posting from you.
I do not think we have to place blame anywhere. We are human and we make mistakes. Teaching people about any kind of danger does not always make that person avoid the danger. My kids regularly do things I tell them might not be good for them, that is their way of learning, by experience. But in many instances they are not going to do something because their “intelligence” tells them this is a bad idea.
March 28th, 2008 at 10:06 am
klippies, you are going to have to comment here more often! Between this comment and some remarks on a message board, I have yet another post to make … but after my test today!
March 28th, 2008 at 10:23 am
I think that ultimately the responsibility is on the individual or in the case of a minor the parents. Yes we are human and make mistakes but ignorance is not a legal defense. It is a poor defense for any actions really and if we haven’t taught our children that then we are to blame.
If you sign a contract and make no mistake; applying for a credit card is to enter into a legally binding contract that gives all power and rights to the credit card companies. If you complain that you didn’t know that the interest would shoot up if your payment was late - too bad. It was in the legal doublespeak that was in that fine print that you neglected to read before signing that contract, oops credit application. And if you are stupid enough to believe the advertising without question, then you get what you deserve.
Do I think that the banks and credit card companies are deceptive in their ads? Yes, however they stay just inside what is legal. And just because something is legal does not necesarily make it moral or ethical.
So ultimately, it is up to us to educate ourselves, and our children on how to be responsible in every decision that we make whether it is about money, health, obedience, morality etc.
JMO
Shelly
March 28th, 2008 at 10:24 am
It’s not so much putting blame on someone as it is realizing where the deficiencies are. Personally, I think the immediate area of concern is on the parents. It’s simply not enough to tell kids “money is burning a hole in your pocket”. You need to back it up by your own actions as well as out-of-the-box educational examples (such as putting your kid on a grocery budget).
Kids learn so much from their parents, and most of it is through the parents’ actions, not words. If your parents rack up credit card and other debt, get a new car every 3-4 years (like mine), then you’ll think that’s ok unless something else triggers you to think otherwise.
For me, my kick in the head was when I realized how much my debt was holding me back from being mobile or just feeling free, but it took almost 10 years of racking up that debt to realize so.
So, in the end, if I’m going to place “blame” on anyone, the first finger points to the parents. And that’s from both observation and personal experience.
March 28th, 2008 at 10:35 am
I think it is an easy cop out to say it is someone else’s fault for our own poor behavior.
I am in the process of eliminating my debt, but by no means have I ever said that it was a credit cards fault that I am in debt. Truth be told, it makes me cringe when I hear or read about people climbing out of debt complaining about how it was all the credit card companies fault. That type of thinking may serve to get someone angry enough to change their situation, but it does not really change their behavior.
Overspending with credit is a behavioral problem, not a problem of the credit. Do credit card companies “sell” us on the fact that we can have what we want NOW? Of course. Just like all other products advertise their high points to get consumers to buy the product. It is our responsibility to know what it is that we are buying, whether it is borrowing money or Coca Cola.
I think the problem lays more with our society’s view of instant gratification than anything else. We do a horrible job of teaching delayed gratification to our children, whether it deals with money or not.
March 28th, 2008 at 10:40 am
Yes kids learn from their parents. But even children realize when parents make mistakes and have to choose whether to repeat those mistakes or to avoid them.
We may learn some of our beahviour from our parents, but at what point do our decisions become our own? At what point do we take responsibility for our actions? In the end we are responsible only for ourselves. Have you taught you children this important lesson?
March 28th, 2008 at 11:23 am
Who was in control when the incident happened, that’s is who to blame for the incident. The person set up a credit account, the person activates the card, the person swipes the card at a store, and the person spends more money than they have.
At what point is the person not in control? The blame can ONLY be placed in one place.
March 28th, 2008 at 1:00 pm
I don’t think assigning blame gets us anywhere (debts still have to be paid and habits have to be changed), but if we want to think about it, I would assign blame to all parties.
Parents should teach their kids about money. Would it be okay if parents never taught their kids to not play in the street or stick their hands on a hot stove?
The college kids shouldn’t sign up for credit cards when they know they don’t have any money or a job to make the payments with. Would they know this if their parents had taught them? Should they have learned this on their own? Ultimately, if you sign your name it is your responsibility.
The banks know exactly what they are doing. The college kids are easy targets and they know that if the kids don’t pay that their parents will likely step in and pay the bills. Are we really supposed to believe that a bank thinks it is WISE to give a loan to someone without no income? They just have to make enough of these deals and get enough of the people to pay so they can make money in the end.
So there you have it, blame all the way around. I guess you could say the education should have started at home- personally I wish my parents would have taught me about living below my means, but they didn’t have a clue about it themselves so is it really fair to expect them to teach me? Maybe it is or maybe it isn’t, but that means nothing now because I have my own mistakes with money to pay for and at least I have learned the lessons that I can pass along to my own children some day. That’s the only way to solve these problems.
Wow, long comment!
March 28th, 2008 at 6:16 pm
There’s lots of blame.
I blame my parents, because as Eden pointed out, I didn’t get a good example from them as to spending and saving.
This is why, in some cases, there can be generations of welfare recipients.
It’s not that people don’t know the path they are following is wrong. It’s that they don’t know any other way and don’t have the resources to find another way.
I knew I should budget and live below my means. But no one ever sat me down and said, “Hey dummy, This is how it works” every just assumed I knew what they were talking about.
I thought budget meant write down everything i spent money on every month. I didn’t know it meant keep track of expenses then plan out what you need to do in the next months to make sure you had enough money to pay for everything.
As for credit cards, The math involved never occurred to me. I just knew that I could keep making minimum payments and everything would be okay. I didn’t know anyone that paid them off every month. In fact no one I knew really talked about them at all, they just used them.
To sum it up, we are products of our environment, without an outside influence we may very well keep to the same habits that we grew up with.
March 28th, 2008 at 6:19 pm
bah, i forgot to add in my post that Ultimately my financial mess 10 years ago was my responsibility. But I really didn’t know any better.
March 28th, 2008 at 6:54 pm
Please place your ec card higher for your new recipro-friends
thanks
John Bougearel
March 28th, 2008 at 7:32 pm
I think maybe blame is the wrong word but then I have heard many, many young adults who have been told to get a credit card to build credit. I don’t know if they were told not to use it or not. I have decided that my biggest problem was that my parents were great. I rarely ever went without anything and although I wasn’t a materialistic person, what I did want just appeared. I grew up in a dream world and I didn’t wake up until about 48. I honestly believed that because I couldn’t imagine not wanting to work, that I didn’t need a huge retirement. And because I didn’t have a high dollar lifestyle, I really didn’t need to save large amounts either. Was I responsible for my actions? Hell yes and someone needed to hit me with a sledge hammer but they didn’t. Thankfully while I didn’t amass huge savings, I also didn’t run up huge debts.
March 29th, 2008 at 9:07 am
Banks aren’t evil. A contract, a credit card, is a morally neutral thing. People are responsible for their own behavior.
I don’t blame my parents for anything. They were very private about money and never opened the books for me. I didn’t know how money worked, or about household finances of adults. But they ingrained an overall sense of responsibility in me, that I honor my obligations. I have never made a late payment or missed a payment. I started working paycheck jobs at 15 and had to buy my own clothes and any toiletries I wanted that were fancier than the cheap stuff the parents provided for the family, and all my own entertainment expenses. So I learned to manage my money according to my life stage needs.
I had a passbook savings account as a kid; a checking account at 15; and CD’s since middle school…back when the rates were double digit. Well, at that time, so was inflation, so I witnessed an interesting period of time when it was the savviest to buy stuff today before prices went up, even if it were on credit, because all consumer interest was tax deductible back then (even credit cards) and everything would be cheaper when paid back with tomorrow’s dollars. It was an interesting time economically! –Perhaps setting people up for some bad habits that wouldn’t make sense when the economy changed again–a bait and switch? My sibs took out student loans they didn’t need to take advantage of this strategy.
But none of us got a credit card in college. None of us even had a car in college!
But I see so many parents who think they NEED to get their 16 year old a car. Well, if a 16 year old NEEDS a car, then why wouldn’t an 18 year old NEED a credit card? Both things are imprudent!
Then some parents think getting a teenager a credit card to teach them responsibility. Are they also taking them to the bar to teach sobriety? To the whorehouse to teach chastity? LOL
So an adolescent (whose reasoning forebrain isn’t finished developing and they have a weak sense of consequences, hello!) has a car and a credit card, and they go to the bar, and spend all kinds of money chasing women. Wasn’t it you ana that mentioned the T shirt, It was an emergency, She was HOT!!!
Maybe they thought, well, mom and dad didn’t have the money for my college, so now I have tens of thousands of dollars in student loans, so it doesn’t really make a difference if I have this little credit card debt.
But in my debt-free, CC-free young life, the couple of times I managed my money badly and had a bill coming up and no cash to cover it, I went to the bank and took out a small $200 personal loan to pay the bill, and then I paid the loan back. I think I did that twice in my young life. I could have asked mommy and daddy to bail me out but I was too proud and had to stand on my own two feet.
The banks aren’t evil for marketing their cards to young people, because they are acting rationally: people form irrational brand loyalty young. If human beings were rational and that weren’t the case, then banks wouldn’t feel like they had to nab customers young (like cigarette companies). As long as people have a special regard for their first credit card, that will be true.
My debt started when I went to grad school and had to pay for that myself, and simultaneously suddenly needed a professional wardrobe for my internship jobs in grad school, and I had to drive around a 100 mile circuit to get in my practica when there was a GA hiring freeze and I had a $200/month job…well of course I needed a gas card. Then the first job out of grad school paid peanuts and so I had no traction…then I had a long stretch of unemployment and underemployment…so it took a long time to fix all the damage. But every step was rational, made by an adult with a fully formed brain who wasn’t stupid.
My daddy taught me to invest, and I started at 22, and never stopped, never cashed it out even when desperate, all stocks pedal to the metal!!! And he didn’t explain much of it to me but I took his word because he was a pension manager and knew what he was talking about, and he had invested all his life and talked about different companies and had prospectuses around the house. I grew up comfortable with it. That has made me far better off, regardless of any buzzing-gnats debt I carried for a while. Debt couldn’t hold me back from prosperity. So kudos to the ‘rents for that. Mom was a spaver who liked nice things but her going back to work enabled us to go to college without loans. Her strength and confidence was a great example to me and helped make me a strong, confident woman. She always encouraged me to think big, dream big, and go for my goals. Her industry is what I went into eventually, though different job (different talents to exercise in the same industry). Both of them modeled great charity and generosity. So parents can teach a lot of good stuff, even if they are silent or wrong about a couple of things. LOL
March 29th, 2008 at 10:03 am
The individual that manages their credit poorly is definitely responsible. But that does not mean those that prey on the weakness/foolishness… of others are not responsible for their behavior also. Schools that sellout students for cash are the worst in my opinion because they abuse their position of trust to undermine the well being of many students. I wrote more about this in: Majoring in Credit Card Debt
March 29th, 2008 at 12:24 pm
My opinion is that parents are the ones who are responsible for teaching their kids financial responsibility and money management. If you don’t know the risks of getting a high interest credit card or how to budget your finances to pay a loan back on time, you weren’t taught, either directly (face to face) or indirectly by watching and following parents’ examples. This is an important life skill that parents absolutely must teach their children if they want them to become productive citizens. It’s our job to prepare our kids to live in this world. Period.
It’s been my experience that my parents’ generation is very ‘closed off’ as far as discussing finances. I was never taught how to manage my money, and my parental example was that my dad was always juggling his bills to make ends meet. My wife’s parents are the same way. They never discuss financial issues with the kids, which is ok when they’re 10, but everybody’s grown now. So what’s the deal? Are they embarrassed about their own financial issues, or do they just not have the knowledge to manage their money and have no advice to give? I don’t know.
If you’ve taught your children everything you know about how to manage money, you’ve done your job. Just like adults, kids are going to make mistakes, whether financial or otherwise, so expect it. Let’s get past our parents’ ways of raising our children and keeping them in the dark about these things. We’re supposed to learn from the mistakes of the past, not pass them along. The world is entirely different than it was, say in the 1950’s, and lack of knowledge in the information age can end in disaster.
March 29th, 2008 at 12:32 pm
Thanks for all the input folks. This gives me quite a lot to think about.
March 31st, 2008 at 12:48 am
[…] had a good conversation on IM with Ana from DebtFREE-Revolution.com about her recent article about Kids and Credit Cards, and I have my own opinions based on experience and […]
March 31st, 2008 at 11:33 am
[…] Kids and Credit Cards - Who Is to Blame? […]
April 3rd, 2008 at 1:08 pm
Part of me wants to blame the parents for not teaching their kids about money management, but then again, many parents are uneducated about the subject themselves. I’m not sure what the best way to fix the situation is, but I do know some of those card companies are sharks. They’re marketing looks too attractive to someone who is not financially savvy.
I think a little government regulation would be beneficial here in forcing these ads to show what the interest rate will be AFTER all promotions are up. Also, similar to a mortgage document, show what an example payment on $1000 borrowed is, how long it will take to pay off, and how much is paid in interest.
Tim
TheMoneyKings.com