Three Keys to Handling Credit Wisely


Three Keys to Handling Credit Wisely

Why so many teens and young adults get into credit-card trouble, and how to buck the trend.

Regarding your column on how some young people are unprepared for the responsibility of handling a credit card: I'd like to say that my personal experience with credit cards has been splendid. Although I am only 20, my credit limit is about $10,000. I pay all my bills in full and on time. I use only two cards, each of which gives me cash rewards.

I also maintain a detailed budget to monitor my credit expenses and cash flow and help me set goals. I don't use my cards unless I have money in my bank account, so credit is a substitute for cash. That way, I earn interest on my account, plus cash rewards on my spending, and end up ahead.

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Why do so many young people have a lack of understanding about credit cards? Do parents teach the kids bad habits?

Let me tell you a story. A good friend of mine has a daughter -- I'll call her Jennifer -- who's a freshman in college. When Jennifer came home for Thanksgiving, she asked her mother for her credit card to go shopping with friends. Her mother agreed that she could buy a new pair of jeans (for which Jennifer customarily spends $100 or more).


When Jennifer got home from her shopping excursion, she wasn't a happy camper. Seems that her friends had also brought their parents' credit cards -- with carte blanche to spend as much as they wanted. They promptly ran up charges of $500 to $1,000. "I'm not complaining," Jennifer told her mother, "but I want you to feel sympathy for me."

Sympathy? My friend and I were shocked. These young women had left for school just a couple of months earlier in cars packed to the gills with clothes. What were their parents thinking?

When it comes to managing credit, you have three things in your favor:

  1. Sensible parents who make you responsible for your own finances.

  2. Experience with cash, which I'm convinced is the key to handling credit wisely.

  3. A level of maturity that's needed to understand credit and make it work for you.

Jennifer's friends, on the other hand, have three strikes against them.

Student loan resource

In a recent column I offered advice on paying off student loans. But I get so many questions on this subject that I'd like to recommend a new Web site: Sponsored by the National Consumer Law Center and its Project on Student Debt, the site gives borrowers information on repaying their loans, avoiding default, dealing with collection agencies and more.

Two other sites worth consulting:, which lets you compare terms on borrowing and consolidating student loans, and, with comprehensive information on loans and other financial aid.