Credit Cards For Teenagers

Nearly half of British teenagers intend to get credit cards when they are adults, according to a new survey.

The survey by insurer Axa further revealed that 44% of teenagers aged between 15-17 years are keen to take out a credit card when they become an adult.

The Axa study which specifically looked into the financial habits of British teenagers also found that 18% of respondents are keen to take out a loan when they turn 18 while a further 17% confidently believe that they would be overdrawn.

However, the results from the survey by Axa could spell doom for the credit card industry as a similar study suggested that almost half of UK consumers are not protecting themselves against credit cards and bank account fraud.

Wednesday, consumer watchdog-Which? found that 48% of people use the same PIN for more than one card.

Which? revealed that a majority of credit card consumers fail to check that a website is secure before shopping online while a number of them use their mother’s maiden name as a password.

But worryingly, the poll results from the consumer watchdog further show that one in seven Brits write down their credit card PINs and passwords.

Martyn Hocking, editor of Which? Money, said: “There’s a lot more people can do to prevent fraud occurring.

“Shredding documents and checking your bank statements are a good start, but people need to be wise to basic fraud risks such as using their mother’s maiden name as a password, or shopping on websites that aren’t secure.

“By taking a few basic precautions, people can significantly reduce the risk of fraud - without buying unnecessary insurance.”

But with teenagers expecting to take out credit cards upon becoming adults, this could mean that the number of reckless credit card users will be on the rise, a possible indicator that market could be headed for a difficult future.

According to the experiment which gave the teenagers the reins on their families’ budgets for a week, 70% failed to balance the books.

It found that on average the teens overspent by 16% on their £248.40 budgets, with one spending almost £600.

Throughout the experiment, children often decided to continue to treat themselves to luxuries at the expense of others despite the fact 77% had funds from paid jobs and 55% received pocket money.

Professor Nick Chater, a member of the AXA Financial Task Force, said: “These studies emphasise what a huge challenge budgeting can be when you’re still relatively new to managing money and making regular financial decisions.”

“Many teenagers are on the cusp of leaving home for university or to get a job and while some will naturally approach money with diligence, our study suggests that they simply may not be able to cope with budgeting effectively.”

He went on to suggest the lack of budgeting skills was why young Brits are so readily turning to overdrafts and credit cards.

“These things are seen as the norm so that teenagers think they’re only doing what is typical in expecting to get into debt sooner rather than later,” said Professor Chater.

“Some teenagers also have spendthrift financial habits because they are used to getting what they want, when they want it. Over half of our respondents said their parents give them more money if they run out and one in five knows they will get what they want, if they are persistent enough in their requests.”

But consumer watchdog, Which? warns that victims of credit card fraud are liable to pay up to £50, which banks often waive, unless it is proved you have acted fraudulently or without reasonable care.

Some 95% of those polled said after suffering card or account fraud they got all their money back. Just two per cent were not able to get any money back.

Figures from CIFAS, the UK fraud prevention service, show identity fraud cases rose 19% in the first quarter of 2008.