Students & Credit Cards

A few weeks ago I met with my account manager at my bank to discuss the mechanics of withdrawing money from my son’s RESP. He’s graduating at the end of the month and heading off to SAIT in the fall. During our discussion she suggested we set him up with a credit card. She insisted that he would need one once he was in college, though I can’t imagine why he would. I found the discussion both disturbing and fascinating. What is most disturbing is that the banks appear more than happy, eager actually, to give a young person, one who does not have a regular income, credit. The Globe & Mail recently reported that “Household debt in Canada reached a record $1.41-trillion in December” http://bit.ly/bm4qS0.


Why are banks so willing to start children off on this path. I told my account manager that he didn’t need a credit card. A debit card is sufficient for pretty much anything he could need and if he wants to travel he can use a pre-paid “credit” card. I think she was shocked at my response. I admit that I can see why the banks would want to get young people hooked early. If you give a kid a card but no education on how interest rates and compound interest work then you have a customer (read: sucker) for life. I have worked hard to teach my children how compound interest can work for them when investing and against them with credit card debt. Unfortunately, most schools do not devote nearly enough time to financial education and, let’s face it, many parents are in such a financial mess that they either can’t teach their children successful strategies or are too embarrassed to admit their personal financial status.

I left that day without applying for a credit card for my son. I suppose once he’s 18 he can apply for one without my approval. I hope, however, that I’ve given him enough information to make an informed and intelligent decision. I’d love to hear your opinions on the topic of youth and credit.

Start Your Own "Tips Jar"

I was on Twitter when I came across this post from DivorcedDadFrugalDad.com, @dvrcddadfrgldad: Your Spare Change "Tips" Jar - http://ow.ly/4MNCQ. 

I love the idea of giving yourself tips.  One of my little savings tricks is to not use the change in my wallet.  When I go to pay I make myself break a bill.  I hate breaking a bill, especially for something small.  Often I would rather skip the purchase than break a $5, $10 or $20.  If I do then any coins that I get back are off limits.  Once a week I put that change into my "Tip Jar".  I am always amazed at how much I can collect, often between $5 and $10 dollars.  This is my fun money.  When I had consumer debt I would use this to make an extra payment at the end of the month. 

I'd love to hear your thoughts on this.

Adelina