In a world where Klarna means that young people are more readily getting credit from their favourite stores, stores are offering you a store card when you go to check out for an item and Apple Pay and contactless mean you barley ever exchange cash for an item it is fair to say our young people have a different relationship to money then we did. This makes it all the more necessary to teach our students about Credit, Debit and the impact of their shopping habits on their credit scores for the future.
On a personal note, I can still remember an intervention me and a housemate had to stage for a friend in our second year of university. Her credit card spending was out of control and we could see her spiralling into debt. The intervention included cutting up her credit card so she would only spend money on her debit card. Looking back at it it was quite a mature thing to do, as we could quite easily just have admired her new clothes and laptop. I was lucky to have a group of friends I could discuss my financial health with. Our students might not be.
According to The Money Charity in February 2021 Credit card debt averaged £1962 per household and £1032 per adult. They also noted that a credit card on the average interest would take 24 years and 5 months to repay making only the minimum repayments each month.
I’m loathed to say Credit cards are bad. Because they really aren’t. There are purchases on which I would absolutely use them. Buying flights for instance which are automatically insured via the credit card company. Always helpful when stranded in an airport after numerous flight cancellations (I’m speaking from experience). They are also important to build up a credit score.
The resources this week highlight:
- The difference between debit and credit
- Interest rates
- How your credit rating is developed
- The importance of a credit ratings
- Where to use your credit and debit cards.
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