wise words financial responsibility
Dave Says
Dear Dave ,
I ’ ve seen lots of companies marketing pre-paid debit cards for kids . They seem to position them as a way parents can set spending limits for their children . Do you think these are a good idea ? It seems to me they are just a form of conditioning kids to rely on cards .
- Keith
Dear Keith ,
I agree with your assessment . I don ’ t recommend pre-paid debit cards for children , except in very unusual situations . Let ’ s say your kid was going on a trip , and you wanted him or her to have something in their pocket for limited access to cash . But if they ’ re old enough and responsible enough , I ’ d rather them have a traditional debit card attached to their own account .
What I really want parents to do is teach their children how to work , give , save , and spend wisely . It ’ s all about teaching your children to become good adults , and handling money is part of the equation . How does that apply to something like a pre-paid debit card for a kid ? For the child , they ’ re looking at it like mom and dad are an ATM . They don ’ t equate it with real money unless they put their cash into the card .
I suggest helping them open a checking account with a debit card attached around age 15 or 16 , provided you have taught them — and they have demonstrated — wise money management practices up to that point . Teach them to reconcile and balance the account , and walk with them when they do this so they don ’ t slip into the idea a debit card is some magical portal to free money !
— Dave
Dave Ramsey is America ’ s trusted voice on money and business , and CEO of Ramsey Solutions . He has authored five New York Times best-selling books . Follow Dave on Twitter at @ DaveRamsey and on the web at daveramsey . com .
College Students and Credit Cards
The Credit Card Act of 2009 limited credit card approvals to teens by requiring that anyone under the age of 21 have a cosigner or be able to prove they have sufficient income . But the law doesn ’ t specify what counts as income , which means some teens may still qualify for their own credit card . In some cases , credit card companies may pay colleges large fees for the privilege of offering students credit cards on campus ! Here are some stats to keep in mind :
41 % of 2016 graduating seniors had credit card debt , averaging $ 3,000 .
Those with student loans had a higher credit card balance , at $ 3,176 .
Average Outstanding Student Credit Card Balance Dec . 2014 - Dec . 2015
Zero balance $ 1 - $ 100 $ 101 - $ 500 $ 501 - $ 1,000
24 %
39 %
6 %
$ 1,101 - $ 2,500 $ 2,501- $ 5,000 $> $ 5,000
3 %
5 %
8 %
15 %
Source : https :// www . debt . org / students / debt / https :// www . thebalance . com / credit-card-companies-love-college-students-960090 https :// www . creditcards . com / credit-card-news / credit-card-debt-statistics-1276 . php
10 | Spring 2018 www . potentialmagazine . com