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Credit card deals – so simple a child could do it

2007-07-30

How would you feel if your child would have a credit card with a $1000 limit on it? Would you be able to drop him at the mall and feel confident that he won't end up with a maxed out balance in less than an hour? Current educational system shows a lack of courses on this subject with just a few courses available to college students.

Apparently, according to an annual survey, conducted by Capital One in 2007, more than half of questioned teens are eager to learn about managing finances. Almost 75% had shown an interest in learning how large assets such as cars and houses are financed, while more than half wanted to know about bank system and credit cards in particular.

To establish themselves in a new segment of a market, financial institutions are now offering credit card programs designed exactly for teens. The drive for this tendency has been the increasing number of teenagers. According to Teen Research Unlimited of Northbrook, there are 31.3 million kids ageing 12 to 19 and this number will be increasing up until 2010. Furthermore, a Harris Group survey showed that in 2006, youngsters have spent approximately $195 billion of their own money.

However, things aren't as out of hand as they might seem. Card issuers are not ready to jump into the boat right away. They are waiting for a moment when youngsters will become financially competent.

There are institutions that are ready to aid parents and their kids with learning programs. Their intention is to instruct people on their liabilities. Certain companies, such as Capital One are offering brochures which are enclosed in every monthly statement. They contain tips on managing your credit cards as well as clear explanations to common financial terms.

Furthermore, companies such as Visa are already ready to offer cards which help parents control their kid's spending. In general, such cards act like secured credit cards with a few extra options. There is a low age requirement, no credit history check and parents have a full control over the limit of the card which by the way is equal to the amount of the money deposited on that card. In all other respects, it's an ordinary credit card.

Talking about credit history, parents must realize that the sooner their kids will face credit cards - the easier it will be for them to get better credit card deals in the future.

But banks aren't the only institutions that are able to benefit from the upcoming wave of new credit card owners. It's not a secret that a big part of online shoppers are teenagers. In fact, ComScore has reported that internet faced 12 to 15 million online shoppers in 2006. There are already online retailers that are fully taking into consideration teenagers and are applying separate strategy to satisfy them.

Seeing how more and more teens are getting involved with credit cards, we must make sure that everything is done to provide them with an extensive and easy to comprehend information before they face a bad debt situation.

So, given all the advantages of credit cards, do they represent a proper and safe financial tool for teens? When it comes to personal financing, can we make sure that teenagers are mature enough? Well, as it has been said before, it's a matter of responsibility and awareness. As long as there is an in-depth educational scheme, one can rest assure that his or her kids are in no danger of ruining their future financial wellness.

Some might disagree, but teenagers shouldn't be distanced from credit cards. The bottom line here is that kids should learn about personal finances in a way that will prove to be effective later in their lives.