Step 5: Credit and Debt
A survey of individuals who filed for bankruptcy in 1997 found that 8.7% of all filings were among young adults ages 18-25. Young people, barely out of their teens are racking up thousands of dollars in credit card debt that they can not pay off. Compiled with student loan debt, the burden of being in the red is often more than they can bear. It comes as no surprise, since their parents, and Americans in general, have a tough time saying NO to buying on credit.
- The average household has 10 credit cards.
- The average interest rate is 18.9%.
- In the year 2000, Americans spend nearly $400 billion on their credit cards and paid about $50 billion in interest (RAM Research).
Over one billion solicitations are sent out every year to try to lure you to use a credit card. In order to survive the onslaught of promising invitations of credit, you and your child must learn the fundamentals of credit card management and the risks you both face by irresponsible actions.