Agree, never pay interest, ever (like others, proud that I never have paid a cent). Get cards for the kids with very low credit limits. Oversee them with vigilance, including any on-line account that pays directly out of a bank account. Take the time to go over monthly payments/timetables/how to spot fraudulent charges, gradually let them take over (while still monitoring) until you know they have mastered the point of the whole thing… what is so hard about that? It’s part of parenting. Sorry, I don’t have sympathy for the millennials that “never learned another way.” Then shame on their parents. Apple doesn’t fall far from the tree.
Really? So they are doomed to a lifetime of financial foolishness? I don’t think so.
Well, someone better teach them, then… Who? Or should they just keep getting in deeper so the rest of us can bail them out? Maybe the credit card companies and banks ought to require financial education before issuing cards to those who have proven themselves incapable of figuring it out or don’t have the guidance (maybe no parents, who knows).
We can do our very best but some kids will never learn no matter what you do. I can see how this simple fact has played out at least three generations in my own family.
And some kids will learn in spite of their parents. Thus the decline in credit card abuse among millennials. Full circle!
Sometimes, they do. How does one explain one sibling who is very careful with money, but the other sibling spends money as fast as possible?
One thing to remember is credit cards were not as readily available in my parents’ generation as it is in mine. I can remember when a credit card was a fairly cool thing to have (my dad had an Am Ex). Our boomer parents didn’t have the training themselves necessarily.
Some of us GenXers did dumb stuff and had to learn the hard way. The millenials watched that and now react accordingly. Every generation acts and reacts. Sometimes the pendulum swings too far. I do think it’s great that the millenials seem more aware of the debt trap.
I was preapproved for a credit card when I was 18 from my bank and got it only because the carrier that I frequently fly with accepts only credit cards for in-flight payments. I also use it for the occasional on-the-ground transaction and pay for checked baggage.
I think my fear comes from watching too many Suzy Orman shows, lol. The first thing she seemed to say to every caller was to pay off their CC bills.
We’ve always charged everything to get the rewards, but pay it off at the end of the month so we never pay interest. We’ve stressed this concept with our kids — credit cards as a convenience only. We got cards for them when they headed off for college because we wanted them to start building credit. They’ve done great job of spending only what they can afford to pay off immediately.
Being debt free means freedom. When you don’t owe you can make choices the you can’t when you owe. Using credit cards like cash and paying them off each month isn’t debt. I don’t see anything wrong with young people being hesitant to taking on debt. If they don’t want to use credit cards that is fine.
My kid uses a debit card. We set her up with it when she started driving because I don’t feel that kids should be driving around by themselves without access to some money in case of difficulties. I think the bank limits liability on the debit card but in any case that account only has a few hundred dollars in it.
We are now thinking about when to transition her to a credit card. What I’m wondering, and haven’t looked into, is how long it takes for a college kid to build up a credit score. She worked this summer but does not work during the school year. I guess my kids are unusual because they are financially responsible. So I am not at all concerned about her going wild with credit and overspending. But I am quite concerned about her missing paying a bill, whether this is due to her general disorganization and in particular not being used to paying bills, or to simply missing bills due to frequent moves and changes of address in college.
I do believe everyone (Millennials included) should have a credit card. College students will need to have established credit when they go to buy their first car, when they move into their first apartment and need to hook up utilities, and when they purchase a new home. I have known several people denied loans and rental contracts because they had “no credit” - not bad credit, just no credit. I also had a family member stranded in another state for a weekend when he had the misfortune of having his truck break down late one Friday night and couldn’t access his checking account until the bank opened on Monday.
Also, life happens. Using a credit card to pay an emergency room co-pay or to replace a 30-year-old refrigerator (just did both this year - and paid them off already) isn’t the same thing as using it to pay for a phone upgrade or designer jeans.
Tutumom–Everyone needs an emergency fund for when life happens.
Life always happens–you can count on it. It’s just as sure as all those other bills coming down the pike.
Those instances should be saved for. Going into debt with credit shouldn’t be the first lifeline. Savings should.
We never use debit cards. I like a security aspect of credit cards. Few times my credit cards had large fraudulent activities and cc companies always took care of those. I also like points and sign up bonus that come with credit card usage. My children use credit cards since middle school. We always pay it off at the and of the month.
My D, age 19, has had a debit card since she was 16. She has said several times she doesn’t want a credit card because credit cards mean debt. She didn’t get that from me! I expect I’ll find myself in the strange position in a few years imploring her to get a card so she can establish credit.
Our feeling on this is that we teach the kids how to use the debit cards well (and we think we’re doing pretty well so far), that when they get credit cards they will treat the credit cards in a similar manner to the debit cards-the money they spend on it will feel “real”, and the only difference is they have to move the money from their checking account to the credit card to pay it off-introduction of an additional step.
We think this should be easy for them to think about paying it off every month if they’re only spending on within their budget, and they’re accustomed to doing so.
I’m not one of those GenXers who did dumb stuff.
Granted, a large part of that was due to watching how a sudden financial downturn or extreme situations(accounts of life during the Great Depression from older neighbors or life in wartorn China in the '30s/'40s from parents and older relatives) caused me to be wary of taking on any debt or “owing” something to anyone.
Its one reason why I made the mistake of not getting a credit card during undergrad…fear of getting myself into debt by wild overspending with credit cards I saw in so many college classmates and older adults. I was fortunate to have been able to graduate undergrad debt-free thanks to a near full-ride FA/scholarship package, part-time/summer jobs, and a 3 figured loan I paid off within 6 months of graduation.
Ended up having some issues because I had NO CREDIT HISTORY after college and took a few years before I built up enough credit to rent better apartments or to get the no annual fee AMEX card I wanted for tech purchases/warranty coverage.
While I do use credit cards, I pay them off in full and constantly question myself on whether I can postpone or even put off a purchasing decision altogether…especially for discretionary spending and thus…not spend in the first place.
“Our feeling on this is that we teach the kids how to use the debit cards well (and we think we’re doing pretty well so far), that when they get credit cards they will treat the credit cards in a similar manner to the debit cards-the money they spend on it will feel “real”, and the only difference is they have to move the money from their checking account to the credit card to pay it off-introduction of an additional step.”
There’s really no need for an additional step. They can just have it auto-deducted from a checking account the same way you might have your utilities deducted from yours.
We don’t use debit cards. I could not pay our bills if the checking account were to get frozen in case of a fraud situation.
My D has a debit card but it is not linked to the account her paycheck goes in. She only uses it mainly for getting money out of ATM, she does not pay with it at restaurants where they take your card away.
I think it is a very bad practice to have accounts with variable amounts paid automatically from checking. If the electric bill is usually $113 but one month it is entered incorrectly as $1333, that could be a bad situation. A credit card bill set to pay ‘account balance’ every month could cause any incorrect or fraudulent charges to be paid before contested.
And either situation could cause a sad, sad checking account balance until it is cleared up.