Teenagers plan to take out credit cards and loans

By MoneyhighStreet Staff. Published on May 21, 2008 This post currently has no comments.

Teenagers in the UK are planning to take out credit cards, loans and overdrafts when they turn 18, but many cannot complete basic budgeting tasks, a new report has warned.

The AXA financial taskforce found that 44 per cent of 15 to 17 year olds are considering applying for a credit card as soon as they become an adult and that 18 per cent want a bank loan.

In addition, one in five (17 per cent) believe they will make use of an overdraft.

However, 70 per cent failed a budgeting task in which they were given control of their household’’s spending for a week. Typically, the youngsters overspent by around 16 per cent over the seven-day period.

“These studies emphasise what a huge challenge budgeting can be when you”re still relatively new to managing money and making regular financial decisions,” Professor Nick Chater, a member of the taskforce, explained.

“Our study suggests that they simply may not be able to cope with budgeting effectively.

“This may explain why so many children are already considering getting overdrafts and credit cards. These things are seen as the norm so that teenagers think they”re only doing what is typical in expecting to get into debt sooner rather than later.”

Figures from Credit Action recently indicated that the average person in the UK owes £9,216 excluding any mortgage borrowing.

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