How Much Credit Card Education do we Need?

Lion Roar

by Ryan

Yesterday I mentioned that I watched “In Debt We Trust.” I think it’s worth your while watching it, but a fair amount of it was spent interviewing people who had gotten themselves in credit card trouble. The thing I’m wondering is, if they’d taken a course in high school, or received some form of credit card education, would they really be better off?

Do You Need to be Educated about Credit Cards?

Do people honestly not know about the high interest rates and late fees associated with credit cards? Although there is a lot of fine print with your card the basic principal is that you’re going to pay through the nose if you don’t pay off your balance. I truly think that most people who end up in credit card debt do so because of horrible circumstances rather than poor choices (at least I hope). Things like medical issues, loss of a job (without savings), and other major issues probably come into play, so would education really help in these instances?

Waving Meat in Front of a Lion

I think the reason a lot of people get themselves in trouble with credit cards is because it’s a lot like waving a big ol steak in front of a lion. Sure the lion could say that it’s on a diet, but seriously, why wouldn’t it eat it? Give a college kid the ability to spend $5,000 and don’t be surprised if they do just that.

So are the credit cards to blame for waving a big ol’ financial steak in front of our faces? Should they stop marketing to us and just let their companies die? Who’s to blame for this? Since we’re the one using the card, I have a tendency to think that we’re the ones to blame. And by we, I mean all the lions trying to keep up with the Jonses.

A Credit Card Can be a Murderous Weapon or a Useful Tool

Credit cards can either be a blessing or a course, it really depends on which side of the pendulum you’re swinging. For someone like myself who pays off the balance every month I love credit cards. They literally pay me to use their card (which makes me a “deadbeat”).

However, for those who are late, don’t pay in full, and get socked with high interest rates, credit cards are a murderous weapon.

The same could go for something like a chainsaw. A chainsaw is a great tool, because it saves a ton of time and makes cutting down trees a simple task. However, if you put it in the hands of the Texas chainsaw massacre guy (I’m not sure his name, do you know?) it’s a murderous weapon.

Now I guess my point is… isn’t it obvious that a chainsaw can be either incredibly good, or incredibly bad? Aren’t credit cards much the same, and don’t we all already know this?

What do you think? Is credit card education something that should be pushed more, or is it common sense?

Images from cleopold73 and cwsteeds

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{ 7 comments… read them below or add one }

Melyssa December 30, 2010 at 3:01 pm

The problem I see is that many parents don’t educate their kids about money or budgets. I think parents expect the schools to do this. But when I was in school, there was no common sense class about money. Sure there was an economics class, but they taught about stocks on a high level. But no one was there to teach kids to balance a ledger, or even how to use a checkbook ledger. No one explained what a savings was for. We live in an instant gratification society. And when these kids grow up to become adults, many are pretty much screwed….and the cycle continues.

Thomas Herold - Financial Educator December 30, 2010 at 3:38 pm

It’s not about only credit card education. It’s more about financial education in the first place. That’s something of course the government and the banks don’t want us to have. So the question is more how to get financial education into the main stream awareness.

Little House December 30, 2010 at 7:53 pm

I definitely think we are ultimately to blame and need to take responsibility for our actions, but the lack of education on finances as a whole is some of the problem. I don’t want to say it’s a scape-goat for bad choices, but a little education at the right time, say early college, would help reduce some of the poor choices people make. There’s that saying an ounce of prevention equals a pound of something (I don’t remember!) So much for quoting those wiser than me. 😉
Little House´s last blog post ..2011 Goals- Part 1

greg urbano December 31, 2010 at 7:46 am

i will stick with murderous weapon myself, been living without them for over 7 yrs now!
greg urbano´s last blog post ..Photo of the Year 2010

Investing Newbie December 31, 2010 at 8:00 am

His name is Michael Myers! And, you’re welcome for being inspired by my comment on your last post.

I don’t want to rule out Financial Education as a cause until it is present. I’m willing to say that human beings are rational and if given the right information, will make rational, well-informed decisions. But there was no information provided with the credit card boom, just a tag line : Buy Now, Pay Later. The looming assumption here is that Later was always a better time. As in, Later, your house would be worth more. Or Later, you’d have more money in your pocket.

This was also a fault of US Economic Policy as well since it believed that in the long run, things tend to trend upward (irrespective of the cyclical nature of markets). Now that we are taking greater heed with risk, I think something such as a Financial Education course would greater hedge bets. Had there been a class given to all Americans AND the economic crises left so many households paralyzed, then and only then, am I willing to blame it on the foolishnesses of people. But for now, this is just a case of ignorance.
Investing Newbie´s last blog post ..Review- 2010 Goals

TJ McDowell December 31, 2010 at 8:55 am

We pay our credit card off every month too and get our rewards check every few months just for using the card. As far as how to fix the issue – that’s a tough one. It would have been an easy answer 40 years ago. It should have been the parents teaching the kids sound financial principles. Parents today don’t practice the principles themselves though, so they couldn’t really teach it to kids.

If the schools taught it, most kids wouldn’t listen to the lectures. There would have to be some major incentive.

Actually, in the middle of writing this post, I just had a light go off in my head. What if McDonald’s were to teach their employees about financial responsibility? McDonald’s is often the first job a person gets which is where the right time for the learning to take place, and McDonald’s could use it to position itself as a major benefit to society. Plus, if it worked, think about how that would work for the company. Maybe then I’d have respect enough to see them as the coffee-shop replacement they’re trying to become =)
TJ McDowell´s last blog post ..10 Ways To Score Customers With A Photo Blog

KDB January 5, 2011 at 9:28 am

To answer your question, as much as it takes. Really, there is no easy answer. But credit is so easy to overuse, that they should come with a little instruction booklet – not just the legal mumbo jumbo policies, but real life instructions.
KDB´s last blog post ..6 Steps To Follow Before You Declare Bankruptcy

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