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Teens targeted for plastic attack

You've just received a major credit card with your name on it and a $1,000 spending limit.

If mom dropped you off at the mall, or left you home alone to shop online, would you have the knowledge and maturity to use it wisely?

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Probably, but ...
Think of it like learning to drive. You had to drive with an adult for a minimum of six months before you could apply for a full license to go cruising on your own.

Using a credit card wisely takes some practice too and, a dose of adult supervision. The world of plastic money can be tricky and unforgiving. Mistakes hit you in the wallet.

But, the teen market is a profitable one. Did you know that your generation spent $172 billion last year? It's no wonder the credit card industry is bombarding your mailboxes with credit card offers.

So, why are you so popular?
For starters, the teen population is growing. There are 32 million kids between the ages of 12 and 19 in the United States -- about 11 percent of the population -- according to Teen Research Unlimited of Northbrook, Ill.

Last year, you and your friends spent on average about $104 per person of your own green each week, according to Teen Research's 2001 survey of more than 2,000 respondents from around the country. Credit card companies put two and two together and figured they can make money from you -- so you're worth the risk.

F for flat-out failed
Some folks say teens are not ready for credit cards. Jump$tart Coalition, a nonprofit organization based in Washington, D.C., is one of them. And, they did their homework.

Earlier this year, they quizzed 4,024 12th-graders in public schools around the country on topics such as using credit cards, retirement savings, insurance and other personal finance basics. These seniors, your representatives, scored an F grade.

On average, the teens answered only 50 percent of the questions correctly. That's actually worse than five years ago, when 57 percent was the average score.

Dozing through economics and finance classes?
Personal finance is not being thoroughly taught in schools, blames Dara Duguay, executive director of the Jump$tart Coalition.

She says parents have to get involved if they are going to allow their teens to use credit cards (and you thought once you were handed the car keys, you'd be on easy street).

"It takes supervision. If a parent has a co-signed card, they need to sit down with their student and show them what interest rates are.

"Credit cards can be a useful thing as long as they're monitored," Dugay says. They can be an opportunity to learn before going into the adult world."

Such a deal
One of the nation's leading issuers, Capital One, targets high school juniors and seniors with a co-signed MasterCard that is offered through the Internet and mailings addressed to your parents.

The card has a stiff 19.8 percent fixed annual percentage rate and no annual fee. Credit limits range from $200 to $1,000. The teen gets the card -- and the bill -- in his or her name, but the parents are legally responsible for the account.

So, are you ready?
Whipping out a credit card to pay for that new CD is cool, really cool. But, before you swipe your card make sure you know exactly how credit cards work. We've put together a quick checklist to get you started.



-- Posted: May 17, 2002




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