National Debt Relief Shares the Importance of Teens Knowing About Credit

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National Debt Relief discusses how teens and high school students can benefit greatly by understanding credit at their age.

National Debt Relief

Credit card is an extension of a lender’s money, not the one holding it

In an article published last May 4, 2014, National Debt Relief highlights the importance of teenagers learning about credit. The article titled “10 Credit Management Questions Your Teen Should Know How To Answer” stresses that it is never too early to teach kids on the do’s and don'ts of credit. It will help the soon to be college students manage finances a little more wisely.

The article also points out that students who have taken time to invest on classes about financial literacy fared better that those who try to learn as they go. These students who took the classes are more disposed to making better debt decisions and exhibit better attitude in making payments on time. They also had more self control on purchases charged on credit as they rarely go beyond their credit limit.

The article shared some of the items teens need to know about credit such as the following:

Credit card is an extension of a lender’s money, not the one holding it - This is an essential building tool in understanding credit. It underscores the importance of paying back what is due in full because the money belongs to someone else to begin with.

Stay away from debt- The article shares that the number one rule in managing credit card debt is avoid carry-overs. When the bill comes in, it is best to pay the amount in full and not just the minimum. This prevents charges and fees to be assessed on top of the principal amount borrowed.

Interest rates - Teens would benefit from understanding how interest rates and finance charges work. The article explains that it is the profit for the creditor and is also known as the Annual Percentage Rate or APR. More often than not, this is calculated on the amount of risk the lender is getting into with the borrower.

Number of credit cards - The article also shares the ideal number of credit cards to be owned. At present, carrying two cards is acceptable. Anything more than that is already excessive and could lead to more credit problems. One card can be used for daily expenses like groceries and the other one just as an emergency back-up.

Credit score - It is never too early to get teens to understand what credit score is. The article explains how it is a reflection of a consumer’s financial behavior. A credit score has an impact on future credit opportunities.

A good credit score can open doors and most importantly, can yield lower interest rates for other loan instruments. A bad credit score can limit the loan facilities available to a consumer and for those that would agree to a loan might put a high interest rate to cover the risk.

The article also shares how teens can benefit in understanding credit at an early age when student loans are talked about. It equips students with the correct knowledge and instills the right attitude towards debt. This can help prevent the students in managing student loans.

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Paul Ritz
National Debt Relief
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