Ms. Liranzo’s classes had a lot of questions last week when western WA credit union sponsored Credit University was presented at Mercer Island High School.
After learning about their teen risk factors for identity theft, how to build a good credit rating, and how their savings is maximized when located at a credit union, they wanted to know more.
During the 90 minute workshop one question kept coming up: Why, when all the adults in their lives are struggling with so much debt, would a teenager ever want a credit card? And if one is required, when should a teen considering applying for one?
After discussing the perameters of the Credit Card Act of 2009, students realized that unless they were able to prove adequate income or have a co-signor they wouldn’t be able to obtain a card in their own name until age 21. Ok. But why get one at all?
There are cases when making purchases with a credit card offers you distinct advantages over using a debit card. Anytime I purchase something online I always use a credit card. In the event that someone steals my card number and goes shopping with it online, I’m only liable for the first $50 spent on my card. Some card issuers, however, offer zero liability to their customers for such theft, which is an added bonus. Further, federal law says I’m free of the liability associated with that theft if purchase were made where the card was not physically present.
There’s also an added benefit: Wise use of a credit card establishes your credit history and raises your credit score.
While your debit card will only hold you accountable for the first $50 spent on your card, it requires that you notify the financial institution within two business days of the loss or theft. In some cases, zero liability applies only when your PIN wasn’t used during the transaction. As long as the theif didn’t steal your PIN along with your card number, you’re probably okay.
At the end of the day, the choice to get a card card is a personal one that involves multiple factors. We’re all responsible for deciding our own comfort level with what we borrow, our ability to handle debt responsibly, and our capability to pay our bills on time.
If you’re interested in learning about Credit University or about credit unions near you, contact us.