Got teens or twenty-somethings? Buy them this book for Christmas.. You might "save their lives".

[SoCalDem]

scroll down to order the book

http://www.msnbc.msn.com/Default.aspx?id=3939463
Robert D. Manning, a leading expert on the credit card industry, sees families as likely to come under even greater stress as interest rates -- currently near historic lows -- inevitably rise.

Manning, author of the book, "Credit Card Nation: The Consequences of America's Addiction to Credit." He traces the problem to a credit economy in which credit cards have become "yuppie food stamps," akin to a "social-class entitlement" rather than an earned privilege. Now, government figures show that three out of five U.S. families have credit card debt.

"What's alarming is that doesn't accurately reflect the true distress on various segments of the American population," he said. Not included in the Federal Reserve figures are "new kinds of hybrid financial institutions and new loan products," such as those offered at rent-to-own stores. There, interest rates typically work out to more than 200 percent a year, and sometimes more, Manning said. In one such store catering to middle-class African Americans, he said, the annual interest rate came to 800 percent.

Overall, Manning said, "the cost of borrowing on credit has tripled in real terms since the early 1980s." While many credit card companies offer zero percent introductory interest rates to customers with good credit, he said, the rates typically jump after the introductory period, and many Americans do not qualify for the low rates in the first place.

Although the credit card industry says average household consumer debt comes to $9,000, Manning said, it is actually closer to $13,000 when the roughly 40 percent of households that pay their balances each month are taken out of the equation. "In the old days, the best customer was someone who could pay off their loan," said Manning, a professor at the Rochester Institute of Technology in Rochester, N.Y. "Today the best client of the banking industry is someone who will never pay off their loan," because then the client is more likely to incur fees. In 2002, the average household consumer debt translated into $1,700 a year in finance charges and fees, he said.

In the long term, Manning said, the burgeoning debt "means our standard of living has to go down." Dvorkin agrees. "It's going to result in people having to work longer," he said. "Effectively, if this continues, the average American will not have enough to retire on and will not be able to retire."

The record consumer debt also dovetails with other social problems, Dvorkin said. More than half of all marriages end in divorce, and "the number one cause of divorce is financial pressures," he pointed out. After reaching a new record last year, personal bankruptcies "will continue to grow," Dvorkin said. "It's very scary."

[dmr]

1. This is a valuable gift to give. I'm ordering it for my son.

He's 19, with 2 credit cards. But, he's good at not using it and good at paying off what he does use. He's no dummy, but sometimes people get suckered into something without ever realizing it until it's too late. I'm going to get this book for him; I know he'll read it.

His hope is to build a good credit history so that one day he can buy a home. Hopefully that day will come for him.

[SoCalDem]

2. I gave one to each of my three sons.. So far so good..

Kids are not taught much in school these days..and credit cards are insidious.. before they know it, they owe more than they can afford to pay off..

[dmr]

3. That is so true, and what doesn't help are the games the CC industry plays

Already my son has caught on to changing due dates. He even tried to have it automatically deducted from his bank account when due. What he found was the automatic payment would get 'snagged' in a nether-land making the payment too early - or too late.

There was something else he caught, but I forget what it was. He watches them closely. I told him though, that soon enough he won't have the time, nor inclination to monitor these cards so closely. Life gets in the way, as you and I already know.


Edit: grammar

[Lydia Leftcoast]

8. I got caught in the "change the due date" trap

Now I check online at the end of every month to see what the coming month's due date is. It has varied by as much as ten days.

Bastards.

Now that I'm paying them off, they are trying to send me "convenience checks" and raising my credit limit.

Yeah, yeah, I'm wise to your tricks.

[Pastiche423]

4. An excellent holiday gift!

For both kids AND adults.

[babydollhead]

5. we buy our groceries with a credit card

we owe a lot of money on them. My h. works for a nonprofit and makes $32,000 a year. We have 3 kids.

[Lydia Leftcoast]

7. Good heavens, buying necessities on a credit card is a worse idea than

1) Cutting back (I'm sure you're doing that already)

2) You getting a part-time job

I'm slowly but surely paying off what I racked up when I first switched from no car to having a car. It takes so much longer to pay them off than it does to acquire the debt.

[Lydia Leftcoast]

6. I once saw a TV ad in which you could "rent to own" a computer

for ONLY $35.00 a week for a year. Let's see, $1820 for what looked like an ordinary desktop model?

That's some interest rate on a computer that was worth $700 max.

[hendo]

9. and this is why

I always use cash unless I am on a bussiness trip and can expense my credit card purchases.

[SmokingJacket]

10. I got my first credit card after I got my first full-time job... at age 23.

So did a lot of my friends -- it was pretty normal at the time. (I graduated from college in the Bush I era, otherwise I might have gotten a decent job sooner!)

Seems like a credit card used to be considered too risky for a college student, or anyone who wasn't gainfully employed. In retrospect, that attitude made sense...