Discuss credit card debt with your teenage kids before they get into trouble


If your teenage children do run up credit card debt and are carrying balances from month to month, you may want to introduce them to the idea of looking for credit cards that offer lower interest rates until they can pay off the balances. In the meantime, don't let 'em charge another penny!

I want to make a distinction between two different kinds of financial damage that we can do to ourselves. By carrying large loads of credit card debt, we are shooting ourselves in the pocketbook.

Month after month, we are forcing ourselves to spend hard-earned money on items we have long since forgotten about. Even if we already have a huge credit card debt, many of us continue to charge away, thus locking ourselves more tightly into a never-ending downward spiral.

Despite that damage, we never actually harm our credit rating.

The only time we harm our credit rating is when we fail to make a monthly payment on time or when we carry a very high credit card balance relative to the credit limit. Bymissing a payment or by carrying a very high balance, we have indicated that we are not a good risk. If we want to borrow money again in the future, we will be paying higher rates than people who make their payments on time or carry a low balance.

I want you and your kids to understand the difference between these situations. If we owe a lot on our credit cards, that damages our financial position. If we don't make timely payments, that damages our credit rating and our future financial position.

Go online with your kids (if you don't knowhow, have them show you) and search for the words "credit card interest rates." Up on your screen will pop lists of banks across the country that have lowbalance transfer rates for credit card debt.

Write down the contact information for your new best friend. Your kids will be very excited to find out that they can lower the cost of their monthly debt payments if they switch to a credit card with a lower interest rate. However, they will still have to pay off the debt.

Here comes the hard part for you. They may cry. They may plead. They may promise tonominate you for Parent of the Year.No matter what they do, do not pay off the debt for them. The only way teenagers will learn that they are responsible for their spending is by facing the consequences of their actions.

It may seem harsh to make teens spend most of their summer paying off credit card debt incurred a year or two earlier. But a teenager who endures this most dreadful experience is far less likely to get into trouble as an adult and rack up huge amounts of debt later on.

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This article was sent to us by: Rachel Jannon at 06022010

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