Don't Fall for the Kwedit Trap

As a regular commentator on teaching kids about money, I can always count on friends, family members and even fellow journalists to clue me in on outrageous behavior guaranteed to teach the wrong lesson. The latest outrage (which was brought to my attention by Kathy Kristof of CBS MoneyWatch and Dan Fletcher of Time magazine) is a new Web site called Kwedit.

"No credit card? No problem!" trumpets the site. Kwedit gives users an “amazing new way” to play digital games and buy virtual goods now in exchange for the user’s promise to pay later -- with real money. And here’s the kicker: Kwedit lets you pay with cash, or by "asking someone else to pay on your behalf."

This is not a joke, although Stephen Colbert turned it into one in a classic send-up on The Colbert Report. Kwedit’s "Kwedit Promise" feature is not for children, the site cautions; it is a service for adults and teens age 13 and older. But 13-year-olds hardly qualify as adults, and some of the games are skewed to a young crowd. One of the participating games, for example, is FooPets, which lets users adopt digital pets and buy virtual products to feed and care for them.

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In my view, the real aim of Kwedit is to make it easy for kids to spend money (or, even worse, borrow it) while sugar-coating the transaction with a veneer of financial literacy. “Consider Kwedit a safe environment in which you can build the proper discipline, organizational and commitment skills you will need to take care of your finances and credit in the future,” Kwedit advises.

Even well-meaning journalists fall into this trap. Wrote one, "Kwedit is a way to become acquainted with credit early, while still on training wheels."

Kwipes! That training-wheels metaphor always makes me cringe. As I wrote a number of years ago, "giving your kids credit cards when they’re young is like letting them use drugs early so that they won’t turn into addicts."

I’m glad a cool guy like Colbert felt obliged to weigh in on this so I don’t sound like an old fogey or a broken record (make that an MP3). When it comes to teaching children about money, it’s important to think like a kid -- and 13-year-olds are still kids. They will not be inclined to use a site such as Kwedit to “build money skills and discipline that will last for the rest of your life.” They will use it -- they’re actually encouraged to use it -- to “pass the duck” and get relatives and friends to pay.

The best way for kids to learn how to manage credit wisely is to be responsible for buying real stuff with their own hard cash. Once they’ve learned to pay the bills, instead of ducking them, they’re ready to move on to credit.