Teen's credit card shock a cautionary tale

Although a bank might give you a credit card, you don't have to use it. Photo / iStock

Q: A few years ago, my daughter entered the workforce in a relatively modestly paid job.

She applied for and got a credit card with a limit of $500 and within a year or so she excitedly told me the bank had sent her an unsolicited letter increasing her amount to $10,000.

I was horrified, but fathers know nothing to teenage daughters, and I sneaked into her room and watched the balance grow to $10,000 over a couple of years. My father passed away and I gave my children $10,000 each and she paid off the bank.

A friend of mine was much smarter. His daughter went to university, got the credit card with a $500 limit, and the bank then increased this to $10,000. She had no job.

She hit the limit of $10,000 and the bank demanded repayment. My friend was alerted to his daughter's plight and he told the bank to "bankrupt her, and she will be out of bankruptcy in a couple of years, and a good lesson to both of you".

The bank quickly capitulated and did not want publicity and said: "Look, she has bought stuff. If we forgive all the interest would you pay for what she purchased?" He agreed.

Banks are disgraceful to inflict this on young people, and this may be helpful to your readers.

A: Generally the rule is "caveat emptor", which means, "Let the buyer beware". Although a bank might give you a credit card, you don't have to use it. But pushing such high credit on teenagers - or for that matter anyone - does seem over the top. And "pushing" feels like the right word here.

Perhaps if more people tried your friend's tactics, banks might slow down.

By the way, did you really have to sneak into your daughter's room? I don't blame you for worrying, but we've got to be straight with our kids if we want them to be straight with us.