Student Credit Cards–Choosing Is a Question of DNA
Credit Card Debt in the Genes
When researchers at the University of California and the London School of Economics teamed up to explore how genes affect some behaviors they came up with a surprise finding. People who have a low-efficiency version of the MAOA gene are significantly more likely to build up troubling levels of credit card debt.
The Spring 2010 edition of LSE Research explains:
The MAOA gene is linked to the neurotransmitters serotonin, dopamine and adrenaline, which, among other things, control mood, heart rate and cognitive ability. How efficient the gene is… influences the chances of someone being impulsive and prone to addiction.
Of course, there’s nothing to stop people overcoming their impulses through sheer willpower, but this remains an interesting insight, and one that may be of particular concern to those parents who have to help their teenage children decide what sorts of plastic (if any) to use when they arrive on campus later this year.
Credit Card Regulation and Students
As yet, there’s no generally available test for the gene, so parents still have to use their common sense to work out whether the apple of their collective eye is one of nature’s hoarders or wastrels. But they should be happy that this year, for the first time, nearly all of them have the power to determine what card their teen will carry. And that’s thanks to federal credit card regulations that came into effect earlier this year.
According to the FDIC, the new rules say that credit card companies:
…will be prohibited from issuing a credit card to a consumer younger than 21 unless he or she submits a written application that includes the signature of a co-signer over 21 or information indicating the young consumer has independent means to repay the card debt.
Before Co-Signing a Credit Card Application
If you’re a parent in this situation, you should think twice before co-signing a credit card application. Of course, if your son or daughter is great with money then the risks are low, and the benefits (in terms of the child building up a credit report early) considerable.
But beware. If your youngster can’t keep up with payments, credit card companies expect you to settle in full, and any delinquencies display on your credit report.
If you have concerns about your kid’s financial self-control, you should consider refusing to co-sign, and instead:
- Insist on a debit card (but don’t opt in for overdraft cover)
- Add the child as an authorized user on one of your credit cards (piggybacking)
- Make the teen use a pre-paid card (but shop around, because fees vary hugely)
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