Ignorant To Consequence - Young People And Credit Cards

In a decade of an alarming credit crunch, rising cost of food, skyrocketed costs of living and an alarming debt for entertainment, most young people struggle to understand the basics of personal finance. This is from personal experience, observation and according to the results of a recently published government poll.nnThe Department for Education and Skills survey showed that 25% of those aged 16 to 21 mistakenly believed store cards offered better value than credit cards, while 40% did not know what an APR was.nn(For those reading, an APR is the The annual percentage rate (APR) is an interest rate that is different from the note rate. It is commonly used to compare loan programs from different lenders. The Federal Truth in Lending law requires mortgage companies to disclose the APR when they advertise a rate. Typically the APR is found next to the rate. For example 30-year fixed, 8%, 1 point, 8.107% APR. The APR does NOT affect your monthly payments. Your monthly payments are a function of the interest rate and the length of the loan)nnA culture of secrecy appears to surround financial matters for young people, with more than a quarter of 16 to 21-year-olds admitting they would not tell their parents if they were overdrawn, and one in five saying they would not tell them if they owned a credit card.nnI have suffered from this debt-hiding disease as well. In times of need I swiped my card and hid all the statements, for fear that my parents would open up my statements, and I would be banished in the house for an indefinite amount of time.nnBut, parents are just as guilty of making money a taboo. Almost half said they did not feel comfortable talking to their children about money because they did not want to sound like a nag, while 22% said they did not think their children considered money matters important.nnParents have their own fair share of knowledge gaps - the survey suggests 56% did not think students could get credit cards, for example - but they do at least acknowledge their weaknesses. Some 92% said they would welcome advice on managing money for students.nnStudents, like the working adult, has many expenses that need to be covered as well, such as food, transportation, books and other miscellaneous expenses.nnA campaign called Talking Money has been launched by the DfES in an attempt to encourage families to be more open about financial matters, offering advice and solutions on this widespread illness that has struck young people today.n