Money-smart Kids: Kids and credit
News from an update – Chicago Tribune:

With the upheaval in the financial-services industry over the past few years — credit card legislation, new rules (and fees) for debit cards, a flurry of celebrity-endorsed prepaid cards, and the advent of digital wallets — I thought this would be a good time to take stock of my advice on when and how to teach kids how to use plastic.

After taking a good look at my position, I’m sticking to it. Changes in the financial-services industry are generally aimed at adults, who value cost and convenience. But it’s important for kids to learn hands-on lessons that build on one another.

— Start with a cash allowance. A digital wallet may offer the ultimate in convenience, but it also presents dangers for kids (and adults) because it makes it too easy to spend money. Kids need to learn the discipline — and feel the pain — of parting with cold, hard cash before they move on to more sophisticated payment systems.

— Use a debit card wisely. Debit cards are still the best way to teach older teens and college students how to manage a stash of real money without overdrawing their account. What’s changed is that kids and parents have to be more vigilant to get the best deals and avoid charges. For example, credit unions are good sources for free checking accounts (find a credit union at www.culookup.com or

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Related News:

Consumer agency softens credit card fee limit
News from CBS News:

(AP) WASHINGTON – The Obama administration’s consumer financial watchdog agency is backing off a plan to limit big upfront fees on credit cards.

The Consumer Financial Protection Bureau acknowledged Thursday that its proposal would increase costs for cardholders and allow banks to charge more in fees.

The limit applies to the fees that banks can charge people in the first year they hold a credit card. Those can include annual fees, application fees and other upfront charges.

An earlier plan would have blocked banks from charging fees totaling more than 25 percent of the cardholder’s credit limit. It would have limited application fees and other upfront costs.

The consumer agency is supporting a change that would let banks charge whatever fees they want before the card is issued. The 25 percent limit would only apply to fees charged after the card is issued.

The CFPB was set up after the financial crisis to protect consumers from loans and cards with hidden fees or other traps. The fee limit was first proposed by the Federal Reserve in 2010, before Congress created the CFPB.

Republicans and business lobbyists opposed the agency’s creation and tried to prevent it from gaining power. They argued that it would limit consumer choice, in part because fee limits would discourage banks from offering some services.

By tipping the…………… continues on CBS News

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