Growing Debt with Credit Cards
Below is an article relating to credit and debt.
Credit card come-ons snare young in growing debt
My daughter is married and no longer lives with us. But we still get junk mail from credit card banks luring her into the buy-now, pay-later society.
My son is in college and tells stories of credit card come-ons offering free mugs, key chains and T-shirts.
So it comes as little surprise that credit card debt among young people is rising.
In fact, credit card debt among adults age 25 to 34 has increased 55 percent, while credit card debt among persons 18 to 24 has leaped 104 percent since 1992, according to Demos, a New York-based public policy organization.
“This is an age when you set credit and finance benchmarks for the rest of your life,” said Tamara Draut, economic opportunity program director at Demos. “Young adults starting off in the red will find that it impacts their financial security for years to come.”
Will this new report sound any alarms? It should.
The average indebted young-adult household (age 25-34) spends nearly 30 cents of every dollar earned servicing debt, the report states.
About 71 percent of credit card holders age 25-34 revolve their balances, rather than pay them off each month, compared with 55 percent of all card holders.
And three out of four 18- to 24-year-olds carry a credit card balance, attributable mainly, Demos contends, to “unregulated, aggressive marketing” by campus card come-ons.
Having a credit card can be a good thing. Used wisely, it can teach a young person to budget. And it is one of the best ways to build credit.
But handled badly, it can doom a young person to long-term debt. Unfortunately, more young Americans face debt hardship, the Demos report concludes, suggesting that they are learning more how to spend than save.
The report argues that the country should address this rising credit card debt among young people. One suggestion is that lenders ensure that those under 21 have a co-signer for a card or prove they have an independent means of support.
To view the full report, “Generation Broke: The Growth of Debt Among Younger Americans,” go to www.demos-usa.org/pub295.cfm.
Date: Nov. 03, 2004
PAUL WENSKE
|
