Monday, June 22, 2009

Students, Credit Cards and Financial Independence... Can they get along together? (2)


It's becomes apparent (at least in my modest financial perspective) as to the coordinated role that first and foremost parents (as financial educators teaching their children about credit cards), private, government entities and banks should play in a continuous educational effort even when their children start thinking about their "financial independence" when they simply assume that by becoming credit card holders, they are entitled to get indebted when they start their college education.

The study How Undergraduate Students use Credit Cards makes evident (page 3) that "One third of students rarely or never discussed credit card use with parents, and nearly all undergraduates would like more information on financial management topics". (this looks like the bottom line as to the current indebtedness problem many college students are grappling with by the way...)

Since there is an obvious contradiction between those who favor financial independence for teenagers and those who are advocating the urgency to educate them financially, I'll continue by making reference of what looks like a series of concrete advantages of educating young people on credit cards and indebtedness.

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Financial Culture / Cultura Financiera ©


Raymond Lindsley said...

I can remember being offered credit cards as a college student and how shocked I was that anyone would want to offer debt to cash strapped students. Ideally, students would understand the risks of credit card usage and how to responsibly handle their credit by the time they get to college, but that is ,sadly, not the case currently.

let's hope it will be someday.

Mario P. Lopez said...

Dear Raymond,

Your testimony gives also a clear idea as to the urgency to teach college students about financial literacy as a whole but to teach them particularly about the serious (and real of course) risks of getting indebted to pay tuition and books as well as stuff, more stuff, etc.

I'd like to think that the recent changes in credit card regulations will be the first step in that direction even though some banks (JP Morgan one of them if I recall correctly) already raised their interest rates.

It would be a total business nonsense if those banks would end up given "employment" on a full time basis to credit collection companies; I think that such extreme scenario would be also a total mess for them in terms of cost-benefit (a soaring cost for them of course).

Let's continue talking about this key subject.

Thanks to you.