STEVE INSKEEP, host:

We're getting close to the time when many high school seniors will graduate, which is also the time when many will be getting their first credit cards, which they may not be ready to handle responsibly.

NPR's Scott Horsley reports on an effort to teach students how to use credit wisely.

SCOTT HORSLEY reporting:

By the time they turn 18, about one in five high school students already have a credit card, and they're not shy about using credit, sometimes more than they should.

Some young people now find themselves in bankruptcy when they're barely out of their teens. Bankruptcy filings by those under 25 nearly doubled during the 1990s.

Judge JOHN HARGROVE (Federal Bankruptcy Court, San Diego, California): This young age bracket is so enmeshed with image and wants instead of needs. It's how they look, how they dress, what they wear, what they, the kind of car they drive. And that's where they get into trouble.

HORSLEY: Bankruptcy judge John Hargrove got tired of seeing bankruptcy filings from such young debtors, so he's here in the auditorium of San Diego's Kearny High School, offering a couple of hundred seniors a crash course in using credit wisely.

Judge HARGROVE: What we want to do today is tell you about how to get credit and credit history, but also avoid the pitfalls in damaging yourself financially.

HORSLEY: Young people typically don't have mortgages to pay or big families to support, so if they get into financial trouble, it's usually because of credit cards. Eighteen year olds can get a card without a parent's signature, and a survey by Junior Achievement found some youngsters carrying credit cards when they're just 13 years old.

Hargrove urges these high school students to ask themselves before making a plastic purchase, is this something I really need or just something I want? The question draws a sheepish reaction from senior Eric Wardenour(ph).

Mr. ERIC WARDENOUR (Senior at Kearny High School, San Diego, California): I have a debit card and I do use it for silly little purchases, like a couple of dollars and all that small little stuff.

HORSLEY: Those small purchases can add up to sizable monthly bills. And in a worrisome sign, more than one in seven teenage credit card users makes only the minimum monthly payment.

Hargrove warned students about a grade they'll soon be getting that could stay with them long after their GPAs and SAT scores are forgotten.

Judge HARGROVE: Who's heard of FICO, the term FICO? Anybody? Okay, yeah, one, two, three. This is going to be probably the most important score in your life.

HORSLEY: FICO scores are a measure of a person's credit history, and they can have a huge bearing on the cost of borrowing money.

Bankruptcy attorney Jeffrey Schreiber(ph) tells the students just a few late payments, or too many maxed out credit cards, can ruin their FICO scores and force them to pay four times the interest rate on a car loan, for example.

Mr. JEFFREY SCHREIBER (Bankruptcy Attorney, California): Can you imagine, if you're working hard, you're getting out of school. You're going to want a car. You want to have some money for the weekend. Guess what? If you're paying 21 percent rather than six percent, where's the money for the weekend gone? It's gone to the bank. What do you get for it? Nothing. What does the bank get? Your money.

HORSELY: While a credit history is not exactly a permanent record, black marks do last for up to seven years. So mistakes students make when they're barely out of high school could end up costing them well into their 20s.

Hargrove and Schreiber's presentation is called the CARE Program, which stands for Credit Abuse Resistance Education. It's modeled on a program launched by a New York bankruptcy judge several years ago, and it's funded in part through the settlement of a deceptive lending complaint against a rent-to-own company.

Unlike the similar sounding DARE program, aimed at drug abuse, the CARE program does not preach zero tolerance.

Mr. SCHREIBER: It's not bad to have a credit card. It's just wise to know what you're doing.

HORSLEY: Schreiber and Hargrove say having a credit card, using it sparingly, and making payments on time is actually a good way for students to build credit history that will be important if they eventually want to buy a home or finance a business.

Many of the students in the audience have been offered credit cards, if they don't already have them. Senior Eric Jordan was tempted by a zero percent interest offer, but eventually he turned it down.

Mr. ERIC JORDAN (Senior at Kearny High School, San Diego, California): I don't think I'm ready to handle a credit card yet, so - I'm still learning how to manage my money from my bank account.

HORSLEY: For Carmen Polacios(ph), the CARE program reinforces a lesson she's learned watching her older brothers. They started using credit cards early and got in over their heads.

Ms. CARMEN POLACIOS (Senior at Kearny High School, San Diego, California): If they don't have a job, then they're just going to go on using their card for things they don't need, then it adds up. They're paying it off right now, but at sometimes they need help from my parents to pay it off.

HORSLEY: All high school seniors in California must take economics classes, but they often skip over personal financial literacy. With backing from banks and other lenders, the San Diego city school district is looking to add more financial advice, possibly in students' homerooms.

In the meantime, Hargrove and Schreiber will keep giving these CARE classes. They hope to see more students in these assemblies so they don't see them later in bankruptcy court.

Scott Horsley, NPR News, San Diego.

INSKEEP: A pop quiz on the cost of buying on credit is at npr.org.

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