This is a guest post from Stewart Smith
In the present financial situation, the money that you earn from your job is just not sufficient to cover everything you want. Now, the most obvious solution would be to get a credit card in order to fulfill all your desires. Well, this is the way how most teenagers think and they do not see anything wrong in accumulating a small amount of debt. However, they usually end up in an overwhelming amount of debt. Under such catastrophic situations, it is quite obvious for them to consider a debt relief program. It is extremely crucial to comprehend the various reasons for teens getting into an unbelievable sum of debt.
Following are a few factors which help in analyzing why and how teenagers acquire such huge amount of outstanding dues.
Lack of economic literacy – According to the information gathered from the government and other non-profit sources, the personal savings rate for U.S. is the lowest in comparison to other first-world countries. Prior to the financial meltdown in 2008, near about 2 million families in U.S. filed for bankruptcy. This is because practically half of the Americans live ahead of their earnings. The American teenagers live in a culture of extensive financial inconsistency and its quite natural for them to run on debt.
Inefficient handling of credit cards – In accordance with the JumpStart Coalition, about one-third of high school students possess a credit card each. Teenagers, with insufficient knowledge about money management, often fail at handling credit card debts. Credit is a dangerous business and is excellently handled by matured persons with a steady source of income. Rash credit management might affect their credit scores, making circumstances more complicated for them when they want to buy their own home and deal with their own money.
Effortless access to credit for teens – A teenager usually has a smooth access to a credit card. This is generally done by the guardians who add the child as a certified user. An authorized user can easily access the account, but is not required to pay his monthly bills. The parents could adjoin the teen as a dual account holder. However, this is not generally a good idea, since in some cases the teen is liable for his or her debt.
There are various personal finance programs for teens, available online. They provide financial literacy advice for teenagers in an online gaming form. Credit card unions, like Capital One, are collaborating with consumer groups with the purpose of giving training to educate teens.