Families
and
Credit Cards
A project of Consumer Action
and American Express
© Consumer Action 2010
Consumer Action •
Families and Credit Cards • American Express
Training overview
Youth And
Credit Cards
Credit
Alternatives
Building Good
Credit
Discussing
Credit Cards
With Your
Children
Managing
Credit Card
Debt
Youth and credit cards
• Early discussions about how to use credit
can help kids steer clear of trouble when
they become adults
• You can teach your kids how to get the
most out of credit
Consumer Action •
Families and Credit Cards • American Express
What would kids need a credit
card for?
• Emergencies
• Field trips and other travel
• Shopping
Consumer Action •
Families and Credit Cards • American Express
Credit Yesteryear
• What was credit used for in your house
growing up?
Consumer Action •
Families and Credit Cards • American Express
Credit card eligibility
• Individual credit cards are issued to people
18 years and older
• Your child can be an authorized user on
your credit card account
• You (the primary cardholder) are
responsible for all payments
Consumer Action •
Families and Credit Cards • American Express
Authorized users
• Credit card policies for authorized users (secondary
accounts) vary widely:
 Minimum age
 Account numbers
 Billing statements
 Credit reporting
 Responsibility
 Marketing (888 - 5OPTOUT)
 Debt collection
Consumer Action •
Families and Credit Cards • American Express
Take a Loan? Needs vs. Wants
• Please refer to the ‘Take a Loan? Needs vs.
Wants’ activity sheet
• If you carry a credit card balance, you are
taking out a loan to pay for your purchases
Consumer Action •
Families and Credit Cards • American Express
Discussing credit cards with
your children
•
•
•
•
•
What would your child use credit for?
Teach wants vs needs
Brainstorm alternatives to financing wants
Set a spending limit
Determine which charges your child will be
responsible for paying
Consumer Action •
Families and Credit Cards • American Express
Credit and spending
management tools
•
•
•
•
Online access
Statements
Alerts
Financial calculators
Consumer Action •
Families and Credit Cards • American Express
Minimum payment example
• Balance: $1,000
• Interest Rate: 15%
• Minimum Payment: 3% ($30)
Consumer Action •
Families and Credit Cards • American Express
Do you know:
• How long it would take to pay off a $1,000
balance if only the minimum payment was
made?
 Nine years
Consumer Action •
Families and Credit Cards • American Express
Do you know:
• How much you would pay in interest if only
the minimum payment was made?
 $576 interest
 + $1,000 balance
 Total payback: $1,576
Consumer Action •
Families and Credit Cards • American Express
Pay more than the minimum
• What would happen if you paid an extra
$10 more per month ($40 instead of $30)?
 Pay-off time would shrink to 3 years
(instead of 9)
 $206 in interest (instead of $576)
 You’d save $370
Consumer Action •
Families and Credit Cards • American Express
Credit card statement
• Please refer to the Sample Credit Card
Statement activity sheet
Consumer Action •
Families and Credit Cards • American Express
Recipe for good credit
• A damaged credit record can affect whether you
get loans, housing, even a job
 Pay the bill on time.
 Pay more than the minimum.
 Keep outstanding balance well under credit
limit.
 Check for mistakes and errors in your credit
report.
 Get free credit report:
www.annualcreditreport.com.
Consumer Action • Families
and Credit Cards • American Express
New rules to protect young
adults
• Proof of ability to pay, or a cosigner,
required for individual card applicants
under age 21
• Parental approval required for credit
increases on cosigned card
• Limited card marketing on/near campus
• Disclosure of affinity deals between
colleges and card issuers
Consumer Action •
Families and Credit Cards • American Express
Credit card alternatives
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•
•
•
Charge cards
Debit cards
Prepaid cards
Secured cards
Consumer Action • Families
and Credit Cards • American Express
Case studies
• Please refer to the Case Studies activity
sheet
• Work with your group to answer the
question at the end of each case study
Consumer Action •
Families and Credit Cards • American Express
Strategies for parents
• Brainstorm how best to help parents reach
kids with smart credit card strategies
Consumer Action • Families
and Credit Cards • American Express
Questions and answers
• Do you have any questions about the
training?
Consumer Action •
Families and Credit Cards • American Express
Thanks for participating!
Consumer Action •
Families and Credit Cards • American Express