Cash Advantages

Among the many topics I write about in this column, one that gets a lot of pushback from parents is my position on credit cards. I'm against teenagers using them because I think most teens aren't mature enough to handle the responsibility.

But a fair number of readers disagree with me. "Using credit cards is a way of life in America, and it's naive to assume that ignoring them will help children avoid misusing them later in life," writes one reader, who also happens to be a financial planner.

She recommends that her clients get credit cards for their teens and make them use them. "We then make sure they understand how a credit card works," she says, "and pay off the balance each month. The kids keep a Post-It note inside their checkbook register and note their credit-card usage, so they always know what to expect when the bill comes."

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Keeping track of ongoing charges is great advice. But why would a 16-year-old have to use a credit card in the first place? That puts a big burden on the shoulders of kids who often struggle to get their term papers and college essays finished on time.

Plus, teens can't get a credit card on their own. If kids don't have the wherewithal to pay up, Mom and Dad are on the hook. That means they have to monitor their kids' purchases closely -- a task for which many parents have neither the time nor the inclination.

And given the current economic crunch, paying with cash is not only sensible, it's downright sexy. Kmart and Sears made news by resurrecting the layaway plan. Financial advisers are telling consumers that the best way to avoid a post-holiday debt hangover is to pay cash.

A TV reporter recently asked me to comment on a story he had done with a family who were asked to spend one week paying with plastic and one week paying with cash. Their conclusion: It was much easier to keep their spending under control when they used cash.

I'm not against credit, and I certainly agree that teens need to learn the rules of how to use it wisely: Pay the bill in full each month. Always pay on time. Don't dig yourself into a hole. Even a balance of $2,200, the average for college students with credit cards, can take years to pay off. (For more advice geared to young adults between 18 and 24, see www.controlyourcredit.gov.)

These lessons come with maturity and experience. If college students can live off campus, pay their rent and utilities on time, and avoid overdrawing their checking account, they'll be in good shape to apply for a credit card before they graduate. Or they could wait, like my nephew, till they're 25. He recently got his first credit card, and he got along fine without one until then.