Share ideas that inspire. FALLON PLANNERS (and co-conspirators) are freely invited to post trends, commentary, obscure ephemera and insightful rants regarding the experience of branding.

Thursday, June 22, 2006

Trend: Bankrupt!: Youth Debt Burden

We've posted more than a few times on the increasing power of the youth dollar in varying categories.

Unfortunately, all that new youth spending on cell phones and clothes and music is creating the unexpected consequence of new youth debt.

Some quickie facts about young people and credit:

• As many as 1/3 of high-school seniors use credit cards. 20% of 18-year-old high-school students have cards in their own names.
• Young adults 18-to-24 spend nearly 30% of their monthly income to pay back debts — double the percentage spent in 1992.
• 76% of college undergraduates started the 2004-05 school year with a credit card. More than half reported getting their first card at age 18.
• The number of 18- to 24-year-olds declaring bankruptcy has increased 96% in the past decade.

Sources: Jump$tart; "Generation Broke: The Growth of Debt Among Young Americans"; Teenage Research Unlimited; Nellie Mae;; Credit Abuse Resistance Education program; U.S. Treasury Department; Junior Achievement Worldwide;

By law, children under 18 aren't even legally liable for their credit-card debts. But nothing prohibits a company from issuing a card to a minor and charging fees accordingly.

And, ironically, this youth non-liability loophole has fueled a quiet increase in PARENTS WHO APPLY FOR CARDS UNDER THEIR KID'S NAME, possibly for the parent's use as their own credit is maxed out (see prior posts on this with regard to rising Kid ID Theft).

Some parents are attempting to head off the problem and nurture some semblance of money maturity by eschewing credit cards and instead opting for prepaid cards (thus jr spends only what Mama gives them).

But one still has to wonder if kids are any more educated about how to manage money (prepaid, debit, credit or whatever form). More answers on that question another time...

Simply said: add all this rising youth debt, to youths' slacker-expectations that Mom&Dad will resolve it for them ( and parents' increasing inability to rescue their debt-ridden kids) and we have some big ol' market opportunities ahead (of course that is my glass half-full manner of looking at it ; ).

No comments: