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3 Huge Tips to Reduce Credit Card Debt |
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The Cold Hard Facts
Were you aware that one out of three high school seniors uses credit cards? With family credit card debt at an all-time high, teaching your kids about credit can prevent them from being irresponsible with their money. Also, learning how credit card companies target teens will help keep your child from being another one of those teen credit card debt statistics.
#1 - 82% of college students carry a monthly debt of under $1,000, and over 59 percent of those students were able to pay their balance off each month.
#2 - 10% of college students carry a balance of over $7,800 and the average student has a debt of $3,200.
Yet as parents know, teen credit card debt statistics can be deceiving. It may seem nice that those students are able to pay off their debt each month, but only 40 percent of those students actually do so. That leaves 60 percent of those students that have unpaid credit card debt accumulating interest.
Set the Example
What do these teen credit card debt statistics mean for you as a parent? It means that teaching your teen about credit cards is important to their future financial health. Even if you have credit card debt that you struggle to manage, you may need to take the approach of Do as I say, not as I do. So, how do you take these teen credit card debt statistics and use them to teach your child about credit card debt?
The first thing you need to do is teach your child that credit is okay, as long as it is used responsibly. Explain that the 40 percent of students paying off their cards each month are being responsible and building up great credit. Show your child how good credit means that they will be able to pay less for cars, houses, and will even help them get a job one day.
Like drugs, credit cards can be cheap at first, but the cost and need grow quickly.
Start with an Allowance
No statistic will teach your child as much about credit card debt than real world experience. You can start when your child is in elementary school with their allowance. Teach them how to budget and save for things that they want. Start off by allowing your child to pick out one item, and then teach them how to save a little every week out of their allowance to buy the items.
Use Debit Cards
As your child grows older, you may want to show them the teen credit card debt statistics, but you can give them real world practice with debit cards. Debit cards work with real money, so your child will have to learn how to budget and keep track of expenses. If you child needs to borrow money from you for an item, teach him or her about interest when they have to pay you back. Of course, your interest can go into their savings account, but it will give him or her and idea of how much interest can cost.
You can also work with a pre-paid credit card or low-limit credit card to ease your teen into using credit responsibly. This way you are lowering the chances of your child becoming another one of the teen credit card debt statistics.
Watch out for Predatory Credit Card Companies
Finally, teaching money management is important, as are learning about teen credit card debt statistics, but it is creative marketing that allows teens to be so tempted by those credit card offers. Credit card companies do a very good job of making credit seem like no big deal to most teens. They lure teens in with big promises, but forget to tell them about the fine print.
Teach your child to read the fine print and help them understand it. It is the fine print charges and fees that often help to create those negative teen credit card debt statistics.
Other Tips for Getting your Teens off to a Healthy Financial Start
Keep Teaching
Knowing the teen credit card debt statistics are just the first step in teaching your child about responsible credit card use. Using allowances and teaching your child how to budget is also important. The more your child knows about credit cards, the easier it will be for them to avoid becoming one of those statistics.
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Did You Know... |
49% of adults, and 66% of US high school students got F's on a national test on their knowledge of basic economic principles.
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Food for Thought... |
"I'd rather go to bed without supper than rise in debt."
-Ben Franklin.
