Four Ways To Help Your Teenage Children Use Their Credit Cards Properly
Now, more than ever, the burden is on parents who need to make sure that their children can make wise financial habits and decisions. If you are a parent who is trying to know how to help your children use credit card responsibly, these are four easy options:
1. Become a co-signer.
Your child gets the card but you’re designated as the co-signer. If your child fails to pay off the balance, you’ll be responsible for it. One benefit of this option is, if your children pay off on time, your credit score will also improve. But no matter how financially disciplined you are, if your child makes a late payment, your credit record will suffer. Your responsibility will not end until the entire balance is paid off.
2. Make your children as authorized users on your card.
This might be a good way to show your children about credit without giving them a full responsibility. Generally, you add your children as authorized users on your account. They receive a card with their name on it. But you’re responsible if the balance isn’t paid off. Both of your credit records will benefit if your children pay off the balance on time.
You can always request to add another child as an authorized user, without allowing him or her to receive a physical credit card. This way, you will help them build a credit history without enabling them to fall into debt. If necessary, you can quickly remove an authorized user from your account through a phone, email or letter.
3. Have your children open checking accounts with their debit cards.
This way, your children are only spending money they currently have. Debit cards may have an annual fee, but your children won’t get into a crushing debt. It won’t affect anyone’s credit score – however on the flip side, it will not help your children to build a good credit record, either.
4. Use a prepaid card.
Although its fees can be higher, prepaid card is an easy way to guide your child about using their cards properly. Most of these cards, however, won’t report payment activities to any credit bureau, so just like using a debit card; your children won’t be building a credit record.
With any of those options, talk with your children to help them compare all the possibilities. Young adults shouldn’t make an important financial decision alone. In the meantime, you might want to consider purchasing ppi for rainy days. However, do ensure that you only purchase what you need or you might end up having for file for ppi claims.
6 Commons Violations in Credit Card Debt Collections
Debt collection agency does the dirty works for the original creditor – your credit card company – and for the junk debt investors who buy credit card debts from the banks. Certain collection agencies are part of bigger credit card companies which also include a collection law firm and a junk debt buyer.
All debt collectors are regulated by the FDCPA (Fair Debt Collection Practices Act). Most states have their own FDCPA version. Additionally, most states require that debt collectors be licensed to contact borrowers to collect debts. Debt collectors may violate FDCPA; these violations can cause law suits by victimized borrowers and/or their lawyers.
Debt collectors attempting to collect credit card debts sometimes violate the FDCPA. There are some of their common violations.
1. They threaten to have your wage garnished. However, it can’t happen without a court order on wage garnishing. In a few state, wages can’t be garnished.
2. They threaten to call the authorities and have you arrested. Luckily, bad debts aren’t a criminal matter.
3. They threaten to seize your savings account. Again, that can’t happen without a court procedure. It is violation of the FDCPA and subject to a $1000 award.
4. If you’ve been making monthly payments to a debt collector, your payment records can get lost or the collection agency you were working with has stopped their partnership with your credit card company. In any event, the new collection agency may insist you still owe the original amount, perhaps more.
5. They add their own interest and fees to your balance to inflate the debt amount to get more profit out of you.
6. They call your employer, your relatives, or your neighbors to collect on the alleged debts; this is a direct violation of the FDCPA.
By learning about common FDCPA violations, consumers can use their knowledge to defeat and frustrate bad debt collectors. Debt collectors are often aggressive in demanding payments. If the consumer can’t make the payment, their last chance is often to immediately file a lawsuit before the expiration of your debt.