Teenagers don’t understand credit cards

Twenty-three per cent of 18 year olds think that credit card is something that they use to buy goods and services where parents pick up the bill. One in 20 teenagers think they do not have to repay credit card debt and 19 per cent of teenagers think that credit cards help them to buy things that they could not normally afford.

The research from the Personal Finance Education Group (pfeg) attempted to assess the attitudes of teenagers towards money matters and to gauge their understanding of bank accounts, credit cards, overdrafts and other commonplace financial items. The research found that while teenagers understand financial matters, they are laid back about debt and spending.

Half of England’s teenagers are or have been in debt by the age of 17 and 66 per cent think about money every day. While 90 per cent worry about money and spending, they think of overdrafts and credit cards as easy ways to spend more than they earn. This attitude could cost them dearly in later life. UK consumer debt is now more than £1.25 trillion.

However, when asked what they would do if they were given £50, most teenagers said they would spend half and save half, with only 30 per cent planning to spend it all. In addition, 62 per cent of teenagers said they wanted to learn more about investing, 54 per cent wanted to learn about saving and 51 per cent wanted to learn how to control their spending.

Wendy van den Hende, chief executive of pfeg, said: ‘Whilst we are pleased to see that today’s young people are relatively clued up on the mechanics of spending and saving money, it’s also alarming to note how seamlessly they appear to be drifting towards an adulthood of debt. We owe it to our young people to ensure that they have the financial acumen to deal with the responsibilities of being an adult. That’s why personal finance education is absolutely vital in schools. We firmly believe that incorporating financial education into the existing school curriculum in a way that is relevant to young people’s lives is the best way to help them gain and retain the financial skills they need for the future.’