Teens targeted for plastic attack
received a major credit card with your name on it and a $1,000 spending
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?
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
Research Unlimited of Northbrook, Ill.
Last year, you and your friends
spent on average about $104 per person of your own green each week,
according to Teen Research's 2001 survey of more than 2,000 respondents
from around the country. Credit card companies put two and two together
and figured they can make money from you -- so you're worth the
F for flat-out failed
Some folks say teens are not ready for credit
Coalition, a nonprofit organization based in Washington, D.C.,
is one of them. And, they did their homework.
Earlier this year, they quizzed 4,024 12th-graders
in public schools around the country on topics such as using credit
cards, retirement savings, insurance and other personal finance
basics. These seniors, your representatives, scored an F grade.
On average, the teens answered only 50 percent
of the questions correctly. That's actually worse than five years
ago, when 57 percent was the average score.
economics and finance classes?
Personal finance is not being thoroughly taught
in schools, blames Dara Duguay, executive director of the Jump$tart
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.