The other day, my daughter told me that a girl in her class got a Credit Card for her birthday.Â I stated that either she was mistaken, or the kid was talking about a pretend Credit Card, after all “…you can’t have a credit card when you are under 18 years of age, because you can’t legally sign a contract.”
TheWife informed me that I was wrong, and that Visa, Mastercard and the like had actually started to market cards to kids.Â I listened, but was still skeptical.Â After all, there was still that whole, “of legal age” thing.Â Then yesterday’s post over at BusyMom in talking about dealing with allowances for her kids mentioned the programs (fortunately complete with links) to programs like Visa Buxx andÂ The Allow Card.
Once, I picked my jaw up off the floor, I went to the article she mentioned from the Wall Street.Â I was flummoxed.Â How did we get to this point, and how do we get back out of it?Â Not once in the articles, web site, did I hear mention of a Savings Account.Â Cash… yes, old fashioned checking accounts… yup, the “problem with figuring out which kid charged something on eBay” (exactly who are these parents that let their children use their credit cards and not know what the child is buying?) and more.Â But not a single mention of a CD, Money Market, or Saving Account.
Is it any surprise then when you look at the trend in Personal Saving Rate,Â it has been trending down for years, and was even Negative for most (if not all) of 2005 – 2006?
Now, I have to admit that in the digital age, cash is not only “old school” it is almost counter productive with so much that is bought online, etc.Â But there are plenty of pitfalls to it as well.Â Before considering a card like this for your kids, take a look at this article which give both the pros and cons of these types of programs.
But ultimately whether you decide to use this tool for your kids or not.Â Teaching responsibility and savings is important too, so do yourself (and them) a favor and teach them the benefit of SAVING as well the quickest and easiest ways to spend.
(I’m just glad to find this article from the Washingtonpost.com that also thinks that marketing cards to kids is an nefarious idea. )