Monday, September 25, 2006
Fears of teen debt over credit card for young consumers
CREDIT card firms have been accused of targeting teenagers with the launch of a payment card.
MasterCard is issuing the cards to children as young as 13 so that they can purchase products on plastic.
How much they can spend is limited by the amount their parents have deposited in advance, but critics have still described the scheme as "irresponsible".
The National Consumer Council claims the cards will get children used to spending money that is not theirs.
The NCC said: "There is a risk that the cards will predispose them to irresponsible spending on credit cards later.
"Payment cards can be useful for certain groups, such as adults who do not have a bank account. But it is a much more dangerous scenario when these cards fall into the hands of youngsters. The fact that these cards are topped up by parents could get teenagers used to spending money on plastic which is not theirs."
However, supporters claim the cards are a natural step in a society which is growing more reliant on plastic.
The cards are being advertised in teenage magazines such as Smash Hits! and Bliss, as well as on Magic FM.
Customers pay Pounds 9.95 to open their card account and pay 85p for each withdrawal from an ATM cash dispenser.
Angela Eagles, the Labour MP for Wallasey and a member of the Commons Treasury select committee, said it would be more appropriate for teenagers to use debit cards which are linked to a bank account.
She said: "I do not think these add anything in terms of financial education. Children can open a bank account and use a debit card which is obviously superior."
The Department of Trade and Industry recently launched an investigation into the way credit and store cards are used, the high levels of interest charged on them and how potential customers are approached. Credit and store cards are the biggest causes of debt among teenagers. A survey seen by the Consumer Credit Counselling Service showed 18 year olds had an average of five credit providers.
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