More Teens Wield Credit Cards - With Parents Paying Debt

August 14, 2007

Teens wield powerful spending tools, namely credit cards, in increasing percentages as they get older, a survey says.

Among teens ages 13-14, only 2.7 percent report having credit cards. However, that percentage nearly doubles to 5.3 percent for teens 15-16, doubles again to 10.6 percent for 17 year-olds, and then nearly triples to 28.8 percent for teens 18-or-older.

The JA Worldwide (Junior Achievement)/Allstate Foundation poll found that 2 percent of teens admitted to occasionally skipping payments. Just over 15 percent make the minimum monthly payment, and unfortunately, some teens make no contribution whatsoever to their credit card debt, with 11 percent acknowledging that their parents make their monthly payments.

In other key findings of the poll, despite widespread financial illiteracy among their age group, 77 percent of teens indicated that they wield strong influence over household buying decisions.

Another question in the survey attempted to discover if parents were conducting regular family discussions about money, and if so, what the effect was on teen spending and savings habits. Nearly three-quarters (74 percent) of teens indicated that they have regular family discussions about money. The most popular topic in these discussions was the importance of saving (80 percent) followed - somewhat ironically in the case of those teens that skip credit card payments - by the importance of paying bills on time (55 percent).

"Parents need to take an active role in teaching their children about the importance of maintaining good credit," said Jim Hohmann, president and CEO of Allstate Financial. "The fact that so many of the teens surveyed are using credit and skipping payments, paying the minimum or having their parents make the payments for them, suggests that they are missing the personal accountability that goes along with using credit. It is critical that teens understand the role of credit in personal finance and the advantages of establishing good credit."

Many parents believe that their kids learn financial literacy skills at school. However, according to a study released in 2005 by the National Council on Economic Education, 37 states have personal financial education standards, yet only 21 require that those standards be implemented. Additionally, only nine states actually require that personal financial education courses be offered to students.

Students from 125 Junior Achievement local area offices across the country participated in the eighth annual poll, administered in October and November of 2006.

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More Teens Wield Credit Cards - With Parents Paying Debt

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