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credit & debt

Credit Cards Not a Game

To children, credit and debit cards aren't as real as money they can see and feel. To learn basic money skills, they need to get their hands on cold hard cash.

Later this year Hasbro will introduce a new version of its classic Game of Life that replaces play money with a Visa-branded card (see A Skewed Take on Life).

That's too bad. Not only does the new "Twists & Turns" edition ($35) advertise a company logo to kids as young as 9, but it also cancels out the hands-on value of the original game: Kids could feel the pleasure of collecting a salary, or the pain of paying for college, by piling up or depleting stacks of money.

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Children don't draw a distinction among credit, debit and prepaid cards. To them, plastic is plastic and none of it is as real as cash. That's why I believe so strongly that kids need to deal in hard currency. And there's plenty of research to back me up.

For example, James Roberts, associate professor of marketing at Baylor University, has done extensive research on credit-card use among adolescents. His conclusion: "When you remove actual money from the exchange, it's easier to spend and more difficult to keep track of your spending."

When researchers stood outside a college bookstore and asked departing students how much they had spent, students who had paid by cash or check could pinpoint their bill to the penny. But students who had paid by credit card offered estimates that were all over the map.

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Brain-imaging studies done by George Lowenstein, professor of economics and psychology at Carnegie Mellon University, show that the parts of the brain that register pleasure and pain are also involved when people make purchases. Buying something stimulates a pleasurable response, and paying for it elicits pain.

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Paying with plastic, says Lowenstein, has the potential to anesthetize the pain. "Swiping a card isn't like giving something up," he says.

Credit is fine as long as cardholders are mature enough to handle it. But because the brain continues to develop until young people are in their early twenties, 'tweens and teens are "susceptible to the lesson that you can finance a purchase through debt and the future will take care of itself," says Lowenstein.

Look, I'm no Scrooge. I can see how kids could find Twists & Turns to be cool and fun to play. To appeal to parents the game will include a booklet based on Visa's financial-literacy curriculum.

Hasbro says it has also enhanced the game by changing the rules: The winner will no longer be the player who accumulates the most money but the one who earns the most "life points" -- a combination of wealth and experience. And, says a Hasbro spokesperson, "If you don't manage your finances well, you can't win."

But as a way of teaching financial literacy, the classic Game of Life is hard to beat. Fortunately, it's still available -- for about half the price of Twists & Turns. Show me the money any day.

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