READY TO CHARGE?|[03/26/08]

Published 12:00 am Wednesday, March 26, 2008

Some teens prepared to use plastic, some not

Felicia Jacobson said alarm bells rang when a student came into her office one day elated: she had just gotten a credit card.

“She said, ‘Ms. Jacobson, Ms. Jacobson! Guess what?'”

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Jacobson, director of Vicksburg High School’s career center, said she was troubled to learn the student celebrated getting her new credit card by going on a small spending spree with her boyfriend.

“I said, ‘OK, do you know how that credit card works? And she really didn’t.'”

Worried that other students had a weak grasp on the concept of credit, Jacobson contacted bankers and credit workers and asked them to speak to the school’s seniors about good credit management and the dangers of getting into debt.

“We’re into the age where we want instant gratification and instant everything,” Jacobson said.

As teens prepare to enter the working world or go off to college, parents must think about how to steer them into financial independence.

But teaching teens responsibility should be weighed against the risk of credit pitfalls.

Cristin Windham is a 17-year-old with a credit card, but she knows it’s not a ticket to run wild through the mall.

Cristin, a sophomore at Porters Chapel Academy, uses her card for gas and meals, knowing every purchase must be approved by her mother.

Janet Windham said she got her daughter the credit card for emergencies, but some regular purchases are acceptable.

“We didn’t want her to be in a situation where she was stranded,” she said.

The Citibank card is tied into Janet Windham’s credit account. She said her daughter drives to Porters Chapel from Port Gibson every day and mainly uses the card for gas.

“I don’t make any purchases on it that I don’t tell her,” Cristin said.

Wall Street shake-ups in the news have shown that failure to manage credit can get adults into a lot of trouble.

So, when do parents know their teen is ready for plastic?

“It depends on the child,” said Cindy Busby, a guidance counselor at Warren Junior High and a mother.

Busby said a credit card is a step on the road to financial independence, but it shouldn’t be the first.

When her son and stepson went off to college, they applied for credit cards to pay new expenses facing them as they began living semi-independently from their parents.

Busby said her daughter, Lauren, 17, a high school junior, has shown she is ready for her own card.

“She’s been working, and she’s so responsible. If she wants something, she uses her own money.”

Carla Smith, a guidance counselor at Warren Central High School, said her office encourages parents to avoid credit as much as possible, especially for those going off to college.

“We encourage parents to talk to their kids about credit cards … and some of the trouble students can get into,” she said.

Many young people build up piles of debt during college, and not just from student loans. Unsupervised lifestyles and unfettered spending can lock kids into years of trouble with creditors.

Jacobson said many seniors get mailings from credit card companies saying they’re pre-approved for cards.

Credit card companies make their profits from late payment fees and interest, and Jacobson said this makes young people ideal customers.

The information sessions given to VHS seniors also touch on identity theft and credit ratings. Students are told there are better ways to build credit than using plastic.

Angela Ellis, a guidance counselor at Vicksburg Junior High, polled 48 eighth-graders and 17 said they sometimes used their parents’ credit and debit cards on errands or for emergencies.

“Several kids own debit cards,” she said. “I can’t think of one of them right now that I would trust with a credit card.”

Ellis said she did not get her first credit card, a Sears card, until she was 21 and out of college.

Carl Willis, 14, an eighth-grader at Vicksburg Junior High, said he knows some friends who use their parents’ plastic, but no one his age has his or her own credit card.

Most of them “are not responsible yet,” said Carl, the son of Alvin and Michele Willis. “They’d probably go wild in the mall.”

Carl said he did not know anybody his age with a bank account and, besides, none of them has a regular job or steady income.

Cristin said most of her friends pay for stuff with cash or checks.

“I’m the only one I know with a credit card,” she said.

Cristin doesn’t have to convince her parents she knows how to save money. She started collecting change during her freshman year to pay for a senior trip to Disney World, and she has already saved close to $900.

Desarai Chiplin, a senior at Warren Central High School, uses a debit card tied to a savings account her mother set up for her, for the purpose of teaching her how to save money.

She uses the card to make emergency purchases and buy gas (she does not have a car) and about one luxury purchase a month (usually clothes, she said.)

“I write down every purchase and how much I spent,” Desarai said.

Callie Williams, Desarai’s mother, said she puts about a hundred dollars in the account every month, but the money is savings for college.

“If I think she’s spending too much, I’ll put a hold on the account,” Williams said.

“We talked about it first,” Williams said. “As part of being a parent, you want them to know how to start off financially.”

Busby said her daughter, who has a job at Treasures Learning Center, has shown she is responsible enough to be trusted with a credit card.

“This is good for building her own credit history, which she’ll need in a few years.”

Parents can judge whether their teens are ready by observing their spending habits, watching what they buy and noting how long it takes them to spend gift money.

As for the students she sees daily, Busby stalled at recommending plastic for junior high students.

“I just don’t think they’re responsible enough to understand money management,” she said.

Busby said she trusts her children not to make extravagant purchases or run up huge debt.

“You know your child better than anybody,” she said. “If you don’t think they can handle it, don’t give it to them.”