Younger Consumers Better Off Avoiding Credit Cards
Young consumers are often the victim of enticing marketing campaigns from credit card companies. Credit card companies recognize that hooking younger consumers to their products will usually mean long term benefits for them.
Credit card holders are more apt to stay with the credit card company that they first enrolled with. This is one of the major reasons why credit card companies are so attracted to young consumers. Another reason is that young consumers are generally less responsible when making purchases and are more naive when it comes to managing their credit. This means that younger consumers have a higher tendency to overcharge, miss monthly payments and maintain revolving debts.
Many experts believe that younger consumers are better off just skipping from getting credit cards. Although they may get a lot of convenience when they enroll for a credit card, the chances of ruining their financial future is also very high. Studies regarding credit card usage among college students, probably the most highly credit card marketed segment among young consumers, have shown that freshmen students with credit cards already carried relatively large debts to their name. A high number of college students also graduated already burdened with debt, even before they have found the means to pay their debts off.
Fortunately for younger consumers, they will have some protection against these types of practices from credit card companies once the Credit CARD (Card Accountability, Responsibility and Disclosure) Act becomes fully activated. This will be on February of next year. One of the major focuses of the Credit CARD Act are young credit card holders. The act will minimize credit card marketing to younger consumers and will make sure that young consumers who apply for credit cards have the proper means to pay them off.
However, for now no protections exist yet for young consumers other than their own smarts. It is therefore a good idea for young consumers to educate themselves first about credit cards before diving into the world of credit card spending.
A few things that young consumers need to keep in mind is that credit cards are serious business. It is always a good idea to pay any balances completely every month and a bad idea not to do so. Their current spending habits will also be something that they will carry with them in the future in the form of credit scores. Bad spending habits now could mean difficulty in getting a loan or mortgage in the future. Finally, it is a good idea for young consumers to remember that credit card companies are in it for the money. Any marketing they do is calculated not to benefit the credit card holder but to bring in profits for themselves.
