Surprise: Kids are more responsible with Credit than assumed - Polidicks

[url]http://www.nbcnews.com/business/surprise-kids-more-responsible-credit-assumed-8C11488198[/url] [QUOTE]It’s a common assumption: Young people are more likely to make financial mistakes because they have less experience with money matters. That’s why parents are often cautioned to be wary about letting their teenagers have a credit card. But is this conventional wisdom, based mostly on anecdotal information, right? A recent study by researchers at the Federal Reserve Bank of Richmond and Arizona State University challenges the notion that young borrowers are a worse credit risk. To the contrary, they found “no compelling evidence that young borrowers are bad borrowers.” The key findings: -Credit cardholders under the age of 21 are substantially less likely to experience a serious delinquency (90 days or more past due) or default than those who get one later in life. -Someone age 40-44 is 12 percent more likely to have a serious default than a 19-year-old. -Those who get a credit card in their teen years are also more likely to get a mortgage while young. “There are some big benefits to getting a credit card early, so parents don’t need to freak out about it,” said study co-author Andra Ghent, assistant professor in the W.P. Carey School of Business at Arizona State. “They may well be able to manage it just fine.”[/QUOTE] Applying the term kids to young people is a bit misleading.

“They may well be able to manage it just fine.” Ya, thanks for that apparently thesis worthy conclusion, "assistant professor" Ghent.

at my school they drilled it into our heads that being in debt to the bank is very hard to get out of. if I had a choice, I'd go with debit.

too bad with colleges being stupidly expensive, and the easy access to goverment and bank loans, most of this group will be underwater in student debt for a long time afterwords... [editline]1st November 2013[/editline] i know i will be.....

This may all be true but credit cards fucking suck. If you can't pay for it, don't buy it. Or get an actual fucking loan.

[QUOTE=snaKs;42719190]“They may well be able to manage it just fine.” Ya, thanks for that apparently thesis worthy conclusion, "assistant professor" Ghent.[/QUOTE] You sure showed him. [editline]1st November 2013[/editline] To be honest though it should have been obvious that people competent enough to serve in the military would be able to handle a credit card.

[QUOTE=Lalelalala;42719455]This may all be true but credit cards fucking suck. If you can't pay for it, don't buy it. Or get an actual fucking loan.[/QUOTE] Credit cards dont have a limit on how much you can spend which is useful if you spend a lot of money regularly. It also lets you build up positive credit score and frequent flyer miles. Some loan companies wont give you loan until you've built up enough credit. Granted I don't see why a kid would need one.

[QUOTE=borisvdb;42719627]Credit cards dont have a limit on how much you can spend which is useful if you spend a lot of money regularly. It also lets you build up positive credit score and frequent flyer miles. Some loan companies wont give you loan until you've built up enough credit. Granted I don't see why a kid would need one.[/QUOTE] Credit cards totally have a limit. Mine has a 500 dollar limit on it, and I know that most are around 1-2000, or something along those lines. That being said, credit cards helped me build a lot of credit quickly, and I have a 719 score after just about two years of building credit. It allowed me to get a loan at a good rate, and set the building blocks for my future finances. Credit cards are a double edged sword. If you treat your credit card like a debit card, it generally works out pretty well.

[QUOTE=SKEEA;42719645]Credit cards totally have a limit. Mine has a 500 dollar limit on it, and I know that most are around 1-2000, or something along those lines. That being said, credit cards helped me build a lot of credit quickly, and I have a 719 score after just about two years of building credit. It allowed me to get a loan at a good rate, and set the building blocks for my future finances. Credit cards are a double edged sword. If you treat your credit card like a debit card, it generally works out pretty well.[/QUOTE] Seems you guys do it very differently from us.

Have these people heard of Steam sales

It depends on the individual really, and what they were taught about money matters and how receptive they were to said information. Personally speaking, I learned to be frugal with my allowances and my requests for stuff because despite having plenty of money in the bank, we prefer to live simply. I learned the value of money when I was very young and carried it over to adult life now. There's nothing wrong with giving credit cards to the younger generation if they will prove themselves careful. It's going on a binge that ends in a downward spiral once they get the power of credit, without realizing they have to pay for it later, that causes trouble.

You think it's an easy solution to a price tag in front of you but if you spend even a second thinking about how many years you'll be paying off your debts if you only pay the minimum balance it blows your mind.

I don't know why you'd ever give a kid a credit cards. Can't teenagers have a bank account and a debit card in the USA? I've had one since I was like 13 and got a paper round. I'm 23 and have never possessed a credit card, I'd only get one to build a credit report.

There are families here in India that kill themselves to be free of bank debt. One guy in the apartment complex I live in poisoned his wife and small kids and then hung himself. That and the bank sends these goons to humiliate and rough you a bit to get you to repay them. Fuck debt, I'll buy only what I have truly earned. Borrowed money ain't real, at least to me.

[QUOTE=Lalelalala;42719455]This may all be true but credit cards fucking suck. If you can't pay for it, don't buy it. Or get an actual fucking loan.[/QUOTE] Worst advice ever. The only loan you should ever get is a mortgage, or a student loan. L [editline]1st November 2013[/editline] [QUOTE=snookypookums;42719724]There are families here in India that kill themselves to be free of bank debt. One guy in the apartment complex I live in poisoned his wife and small kids and then hung himself. That and the bank sends these goons to humiliate and rough you a bit to get you to repay them. Fuck debt, I'll buy only what I have truly earned. Borrowed money ain't real, at least to me.[/QUOTE] Real talk.

[QUOTE=SKEEA;42719645]Credit cards totally have a limit. Mine has a 500 dollar limit on it, and I know that most are around 1-2000, or something along those lines. That being said, credit cards helped me build a lot of credit quickly, and I have a 719 score after just about two years of building credit. It allowed me to get a loan at a good rate, and set the building blocks for my future finances. Credit cards are a double edged sword. If you treat your credit card like a debit card, it generally works out pretty well.[/QUOTE] That seems awfully low. I think I can spend $3000 on my debit card before maxing it out. I think that's based on how much they trust you though.

[QUOTE=snookypookums;42719724]There are families here in India that kill themselves to be free of bank debt. One guy in the apartment complex I live in poisoned his wife and small kids and then hung himself. That and the bank sends these goons to humiliate and rough you a bit to get you to repay them. Fuck debt, I'll buy only what I have truly earned. Borrowed money ain't real, at least to me.[/QUOTE] You're also forgetting that people are turning to loan sharks a lot these days because banks have become a bit more circumspect about lending to people around these parts. Loan sharks not only do the above, they have you iced if you delay repayment.

[QUOTE=borisvdb;42719750]That seems awfully low. I think I can spend $3000 on my debit card before maxing it out. I think that's based on how much they trust you though.[/QUOTE] I think that's usually the reason why they ask you how much you earn at the time of applying to get a credit card.

I have a debit card. I can only spend what I have in my account...but that doesn't help because I have enough to buy whatever I impulsively want.

[QUOTE=geel9;42719765]I have a debit card. I can only spend what I have in my account...but that doesn't help because I have enough to buy whatever I impulsively want.[/QUOTE] I used to have the same problem as you, but I set up a system where I have a set amount of money transferred into another bank account whose cards and other material I never keep in my wallet. That and most utilities are paid on the first week of the month, leaving me with only what I call "spending money" in my account, whose card is in my wallet. Any big/medical expenditures come out of that amount and at the end of the year, whatever is in my reserve account goes into investments. Saved shit tons of money this way, enough to invest a fair bit. You should try it if you can. [editline]1st November 2013[/editline] [QUOTE=Zonesylvania;42719756]You're also forgetting that people are turning to loan sharks a lot these days because banks have become a bit more circumspect about lending to people around these parts. Loan sharks not only do the above, they have you iced if you delay repayment.[/QUOTE] It's also a big reason why gold loans and the like have really picked up as well. A lot easier to get quick cash that way.

[QUOTE=snookypookums;42719789]I used to have the same problem as you, but I set up a system where I have a set amount of money transferred into another bank account whose cards and other material I never keep in my wallet. That and most utilities are paid on the first week of the month, leaving me with only what I call "spending money" in my account, whose card is in my wallet. Any big/medical expenditures come out of that amount and at the end of the year, whatever is in my reserve account goes into investments. Saved shit tons of money this way, enough to invest a fair bit. You should try it if you can. [editline]1st November 2013[/editline] It's also a big reason why gold loans and the like have really picked up as well. A lot easier to get quick cash that way.[/QUOTE] That sounds like a fantastic idea. My problem is I make a lot of money at the moment but I don't really save any of it. I need a good way to force myself to not be an impulsive asshole; once I get out of highschool that will REALLY bite me in the ass.

[QUOTE=geel9;42719808]That sounds like a fantastic idea. My problem is I make a lot of money at the moment but I don't really save any of it. I need a good way to force myself to not be an impulsive asshole; once I get out of highschool that will REALLY bite me in the ass.[/QUOTE] Well, if that's the case banks actually help you in this regard - most banks have a standing order system that'll allow you to automate this process so you don't need to manually worry about it (It can also be used to pay stuff like utilities, but I don't trust them to do it right so I just do it manually once I've examined the bill). Just set it up (create a standing order that on the,say, 5th of every month, the bank should transfer X amount of cash from your account to Y - another account, maybe in a bank that gives you a good interest rate on savings accounts) and you're good to go. This bit of wisdom came from my dad after he had to bail me out as a college student and spent all my cash a good two weeks before my next allowance was due - "The money you don't see is the money you don't spend" It stuck since then and ever since I started doing this, it's become something of a challenge to see how high I can make that balance go without spending it. :v:

-snip- ignore this

I would really like to use my debit card for everything, but there are just too many things in life that require you to have a credit history. So, I make the minimum payment/purchase on my credit card per month to build up a nice credit history and then I'll ditch the entire thing after a year or so.

[QUOTE=geel9;42719808]That sounds like a fantastic idea. My problem is I make a lot of money at the moment but I don't really save any of it. I need a good way to force myself to not be an impulsive asshole; once I get out of highschool that will REALLY bite me in the ass.[/QUOTE] When you live alone when you've got rent, food costs, fuel bills, water bills, council tax and all the rest of it your pay doesn't look so good

[QUOTE=Doozle;42719906]When you live alone when you've got rent, food costs, fuel bills, water bills, council tax and all the rest of it your pay doesn't look so good[/QUOTE] My current income would easily support me if it continued, but that's not certain at all.

I got my first card as a Wal-Mart card at 18. I never went above 30% and they just kept upping the limit every few months. They eventually sent me the Discover version of it too. I got a bank Credit Card and keep that below 30% as well. I'm 21 now and my credit is over 720. I get gazillions of card offers in the mail now.

Credit cards aren't bad bad comes from misusing them you know, like every single inanimate object people blame for things

If they were smart at all, they would not get a credit card.

[QUOTE=Sword and Paint;42720055]If they were smart at all, they would not get a credit card.[/QUOTE] No, if your smart you get a credit card and build your credit. So in a few years when you want a new car, or house or whatever they see that you can make the bills on time and will give you a good rate.