Credit card offers may seem like easy money to some, especially the young, naïve and innocent. Being able to buy something now, charging it on the card and paying it back later sounds convenient, easy, a fantasy five dream come true. But what if your limit starts at $500US when you are still in high school or in college. I know of youths who started at minimal levels and who chose to increase their limits way pass $1500, excluded are the many additional charge cards at department stores and electronic warehouses. My advice to you who are in a bind and have been caught in the trap of debt, is to stop look and listen. Assess your future goals and keep them in check with your age, your employment status and potential earning levels through retirement. Take a reality check, balance the budget and cut the expensive trends and habits that you have been tinkering with.
1. Cut up all but one credit card. Get rid of the multiple payments of interest and lump it all together. If you cannot rack your brains with figures, there are some debt management companies that can provide this service for you, at a cost.
2. Whether or not a debt management company is assisting your recovery or not, you need to get enrolled in a debt management class. Many churches and customer advocacy groups have them within the US, Canada, Britain and Jamaica.
3. If you are behind in payments you cannot continue to build up your debt without any means of adequately paying it off. Thus my advice is you have got to bang your belly and make sacrifices towards clearing the debt so that in the long run you will be able to responsibly manipulate your resources.
In an age of e-commerce this is all easier said than done, kids, teens & young adults are spending plenty “Nuff” dollars on CD’s, DVD, video rental, clothing, shoes, pornography, food, gas, books, jewellery, vacation, cell phones and beauty products, you name it…Youth debt in the US alone grossed 158 billion last year, 2001. Congressmen and women have been flooded with letters from constituents, asking for preventative laws to curtail and eventually prohibit the solicitation of minors and unsuspecting youths by credit card companies. The financial Whiz teams have been telling us all for so long, that credit cards are a way of building good credit records. Yet they have not shown us a prudent way to do this, frankly these architects of the debt trap will do ANYTHING to get you hooked. They preach about how invaluable a credit card holder will find the act of signing up when its their time to buy huge capital investments such as car, home mortgage or college loan.
Parents for the most part have been gullible and bought the philosophy, which is a down right exploitative technique, to keep the working class dependent on credit for a lifetime. The worst part is that the financial companies have gone down a road that it’s an emergency tool for college students away from home and need to have security. Many students have bought the credit card on the notion that my independence is here & now and I don’t want my parents’ meddling. I guess they have a point, who wants to be always waiting on the parents to hand out pocket money. Yet there are better ways to handle such strife.
The misuse of credit cards, i.e. several cards in one persons name, especially in the age of debit card and ATM, is a risky much less reckless decision on the part of families. Instead of the wire money transfers, the parents can easily send money to the childs’ bank account, as most banks are interconnected with branches or other banks. The child may then use their ATM or Debit card to purchase items. It will make them have to budget and there is no interest that is being accumulated when they use these instruments.
The credit cards late payment fees alone, along with accumulated bad debt will destroy your credit history. In order to purchase major capital items such as a car or home, your report has to be clean. Those who are in jobs need to realize that it’s not necessarily a permanent experience and rather is more than ever uncertain. In this climate of rising unemployment everywhere, you really don’t want to burden yourself with debt. The danger is that while you feel great that you are doing well now, getting two or three credit cards, Gold, Platinum, Visa, American Express, Master Card, whichever, in your name while your job security is at risk will only lead to escalating debt.
Many graduates of college, after borrowing thousands of dollars, once they have signed up and gotten a job, usually go overboard with spending not recognizing that they are not credit worthy due to tuition loans. So additional loans in the future only complicate their credit history. In Jamaica we are told that many youths have been smart and are staying away from credit cards. In fact, reports suggest the youngest in the workplace have gotten it right for once and are saving towards their homes and motor vehicles.
The language that is being tossed about is that we want to take care of our primary priorities. Shelter, transportation and education for our children, the latter a desire which most parents have for their toddlers but which normally get lost in years of accumulated debt. Commercial banks in Jamaica have pulled out all stops and are even on primary school premises getting children to open an account in $500 and $1000 balances towards saving towards their education. It’s really good marketing and we hope with this exercise more young children will learn the art of money management and be saved from the agony of the DEBT trap.
If you have any concerns about this story or if you have a story to share regarding your own regret with having a credit card or advice for persons on being frugal in these times of money crunch, please e-mail me at: [email protected]. Your firsthand knowledge may just help a whole community, inspiring us all to become better spenders and savers in the 21st Century.