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Everyday Cheapskate: Credit Cards in the Hands of Financially Immature Students

Mary Hunt on

Our kids are fortunate to be growing up in the most progressive and exciting time in history. Sadly, the very culture that offers them the world is also perpetrating this lie: You are entitled to have everything you want, even if you don't have the money to pay for it. It's not a problem. You deserve it. Buy it now, and you can pay for it later!

There's a huge consumer-credit industry out there planning to give your kids their very own credit cards -- personal passports into the abyss of consumer debt. This is not going to require your permission or approval, as one reader is experiencing firsthand.

DEAR MARY: My daughter who is in college got a credit card, and now she is in over her head, unable to pay what she owes.

She works part-time and makes a very small salary. With the high interest and late fees, the balance is now over $2,500. I will have to step in and handle the account.

How can I negotiate with the credit-card company to settle for less? I don't know how she got this card on her salary, but she kept quiet about not being able to make the payments until we started getting collection calls for her. I appreciate your thoughts and expertise. -- Millie

DEAR MILLIE: I seriously doubt anyone will speak with you at customer service unless you are on the account. If your daughter wants to add you to the account, the company may welcome it, particularly if it has had a lot of trouble working with her. At that time, you could try negotiating for a lower payoff. The worst it could say is no.

These companies give young people enrolled in college outlandish lines of credit because they know parents will rescue their overextended kids, and not just one time. Statistics show that in most instances, parents will save the day at least twice.

May I step in here with some unsolicited advice? Here it is: Don't do it. Don't bail her out, even if you feel you can afford it. Unless your daughter has to suffer the consequences of her actions, she will not learn. Even If you were to bail her out now, I predict she will be $5,000 in credit card debt within two years. Unless she does the hard work to repay her debt, she will not learn from her mistake.

You don't want to see a bankruptcy and a divorce or two in her future, but that's exactly where she's headed if this problem isn't addressed now.

 

There are lots of things parents in your situation should consider, the most important being whether you can afford it. I hear from people with their own financial problems all the time, problems often a result of trying to help their kids. Parents should not pay off their children's debts if they don't have sound retirement plans in place for themselves.

Unless you have your retirement on track, to me, that's the end of the discussion. Retirement pensions aren't what they used to be. Social Security is not going to provide the same kind of income that previous generations had. No one is going to be there to help you.

As painful as it will be for you to step aside and not rescue your daughter, it will be a valuable maturation process that allows her to become a responsible adult.

Your daughter may have to drop out of school to go to work full time. If she's really interested in getting an education, she'll be back. I know that may sound harsh, but she has to understand how unacceptable this is and that no one is going to bail her out.

Make sure you are ready to offer lots of emotional support and encouragement. She's going to need it.

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Mary invites questions, comments and tips at mary@everydaycheapskate.com, or c/o Everyday Cheapskate, 12340 Seal Beach Blvd., Suite B-416, Seal Beach, CA 90740. This column will answer questions of general interest, but letters cannot be answered individually. Mary Hunt is the founder of www.DebtProofLiving.com, a personal finance member website and the author of "Debt-Proof Living," released in 2014. To find out more about Mary and read her past columns, please visit the Creators Syndicate webpage at www.creators.com.

Copyright 2017 Creators Syndicate Inc.
 

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