Grokking Credit Cards at 10, Teen Clothing Allowances, Initiative ...

Beware College Students Carrying Credit Cards

The Wall Street Journal reports on research by Professor Cliff Robb at Kansas State University that finds: ?the least knowledgeable students [in the area of personal finance] are about twice as likely as students with midlevel knowledge to carry a maxed-out credit card...and they are more likely to take cash advances and be delinquent in making credit-card payments.?

Shocking! Insert sarcastic smiley face here...

My favorite quote in the article is of course: ?Many financial professionals say the best way to teach students about financial responsibility is to give them hands-on experience before they head off to college.? True dat!

Related FamZoo Activity: Give kids hands-on personal finance experience early with a virtual family bank.

Speaking of early and credit cards, parents need to realize that kids are a lot more savvy than we tend to think.

Out of the blue, my 10 year old asked me how a credit card works while walking to school yesterday. We talked about how it differs from paying with cash, and how it?s basically a loan with really, really nasty penalties for paying late. We talked about merchant fees (?Why does the Noodle House only accept cash??) and rewards programs (?Is that where you get all your free coffees??). We talked about the difference between a credit card and a debit card. We talked about how people get into really bad debt problems when they spend irresponsibly with credit cards. As much as I like to think my kid is a genius, he?s a pretty typical 10 year old. He totally got all the concepts and had some really interesting questions (Q: ?Couldn?t you actually make money off a rewards program?? A: ?Yes, if you?re disciplined!?).

We?re talking about a 10 minute walk here. Wouldn?t it be cool if every kid knew the pros and cons of credit cards starting at age 10?

Try the discussion. They can handle it.

Source: http://blog.famzoo.com/2012/09/grokking-credit-cards-at-10-teen.html

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