I’m not sure those to sentance belong in the same post 
That’s not quite as nuts as giving my student-self a credit card for 5 grand. I was expecting to get $500 limit or so. What kind of student can afford 5 grand in credit card debt?
They are? Even secured cards?
Well, business majors, of course. Art history, not so much.
I think finance and budgeting could be incorporated into middle school home economics classes. My home ec classes covered cooking, sewing, and child care. Not many people sew their own clothes these days, so I propose we drop sewing and put in personal finance. If a school wanted to offer sewing as an elective for high school students, that would be fine, but I think it’s more important that everybody learn the basics of personal finance than that everybody learn to use a sewing machine. It would save on equipment costs, too.
Doing it in home economics also has the advantage that everybody (at least in my middle school, they did) takes the same home economics class. Not everybody takes the same math class. If you taught it in math, there would be a temptation to say, for example, “the advanced kids don’t need this, they know the math”. There’s more to it than just knowing how to do the math. Mindfield, being a reasonably intelligent adult, presumably knows how to add and subtract decimals. That’s all the math that’s needed for balancing a checkbook. But he (she?) still doesn’t understand how or why you would balance a checkbook. A lack of math skills isn’t the only problem here.
Some people will say “the parents should teach the kids that stuff”. To that I say, “How’s that working out for you?” That’s what we’re doing now, and it’s not working. Clearly we need to do something other than what we’re doing now. Of course, what we’re doing now is working just fine from the perspective of the banks and credit card companies, if not from that of individuals. I think it would be an uphill battle to get personal finance taught in schools, for this reason.
That would be one of the worse ones, but it’s not unheard of. If you’re dumb and don’t shop around, you might well get that.
Leaving all ethical questions aside (which is what many of these banks do), whether or not the students can afford it is irrelevant. What matters is whether or not the bank will make money on the deal.
Just for fun, let’s do some math. ShittyCardCo issues 3 5k cards to 3 people, all of whom max it out immediately. The card has a $50 annual fee, and 28% interest.
Student #1 has the card for two years, then pays it off and closes. Even if she never misses a payment or pays any extra fees, in those 2 years, she’ll still have paid $2000 in interest and fees.
Student #2 makes three payments on the card so he can’t be prosecuted for fraud, then never sends a dime. Card Co sells the account balance to a collector for $250.
But student #3 … well she is a minimum-payment gal. And most every month she sends in $125. Months she misses, there’s a late-payment fee. She’s gonna need ten years to pay off that card, and by then it will cost her ten grand in interest.
1/3 of the students defaulted, but the CardCo made $3000.
And very, very few students are like #1 or #2. Most keep them a while, making payments. When they default, it’s after several years of payments.
We actually did a eight grade high school Civics module around personal finance. They gave us “checkbooks” - sent us “bills” and gave us “paychecks” We had to budget for the stuff that wasn’t in bills. Towards the end we got a credit card and the interest lesson - but since interest is pretty complex math for the remedial eighth grade set - there wasn’t a lot of depth there for MOST kids - they just didn’t “get” it (and I suspect that situation hasn’t gotten better). Those of us that could do an interest equation did get it.
I thought it was a wonderful lesson - it fit in with some other things we learned that year (that was the year we did career exploration in Civics as well - what do you want to be when you grow up - go research it.)
One of my favorite teaching stories is I was teaching a ‘liberal arts’ math class - for college students that needed a math class to graduate but only 1.
As an example of interest rates and amortization I used mortgages. The next day an older student came to me before class and asked me to look at her mortgage statement and her calculations because she wasn’t matching the bank. Turns out the interest rate she was supposed to be charged wasn’t…and she was being charged a fourth of a percent higher. She contacted the bank and after some deliberation, they admitted the error and refunded the overpay. It was something like several thousand dollars. She (the student) was extremely happy 
I just check that card’s interest rate (I’ve never needed to know before) and currently it’s either 20% or 24% depending on your credit rating and it’s no fee. That explains how the bank’s making money. I see the bank’s point of vew, but it still seems nuts to give someone with essentially zero income (and big tuition expenses) 5k worth of on-demand credit.
No annual fee – they still get $30 or $40 every time you’re late with a payment, bounce a check or go over the limit (which students are gonna do). Heck, they probably also charge a few bucks if you wanna pay over the phone.
Well, most students do have some income. That 10 hour a week pizza job will give you enough to make a minimum payment each month, or you can get $100 off the folks now and then, or use the money from selling your textbooks or from grandma. You won’t pay them off for years … but they don’t want you too. Some people carry balances on credit cards for decades, sending in minimum payments all along, paying thousands in interest. If they can get a few people hooked on their card early, they have an income stream that will more than pay for the defaults.
If a school teaches personal finance, lesson number 1 should be:
If you buy something with your credit card (let’s say you spend $150 for clothes), that amount is immediately deducted from your bank account balance, same as if you payed with a check or with your debit card. The money is no more. It has ceased to be. It has left your checking account, rung down the curtain and joined the choir invisible. It is EX-MONEY!
Y’know, this kind of stuff is part of what “home economics” really is: how to finance, manage, and operate a home. Somehow when I was in high school, home economics got equated to “cooking classes” and only girls were allowed to take it. (What? Boys don’t need to know how to cook? But that’s another issue…)
Credit cards are not like they were ten years ago. If you bought something and paid only the amount due each month, you could count on paying three times as much for the item before you got the account paid off. It was a hard lesson learned.
It’s different now. There is a sucking wickedness out there. You may be in the middle of paying off your sweet little account at 14% interest when Monster Bank takes over. They let you know that if you are late on a payment, your interest rate will jump to 30%. You feel safe because you are having your payments withdrawn from the bank each month. Then you are notified that you didn’t make your payment last month. You can complain all the way to the top, but you didn’t have an arrangement with THEM to have money withdrawn from the bank. Therefore, your interest is 30%.
Then a couple of months later, they devise a new contract which is impossible to understand. You were not a banking and finance major nor have you studied tax law. This contract was written for the purpose of confusing. Nevertheless, you notify them that you refuse the contract. They change the way that your interest is figured anyway. When you complain and explain that you “opted out,” you get laughed at.
Six months later, another contract revision arrives. The cycle continues.
I paid off all of my credit accounts several months ago. I still get contract revisions sent to me because those accounts are open.
One of these banks is one of those that got bailed out. I also have had a relative, now deceased, who was on its Board of Directors at one time. I can’t tell you how I long to be able to pull strings and tell some people off who have been unkind to me. G-r-r-r-r-r.
Once I called our State Attorney General’s Office and asked what our state usury laws were. The guy just told me to pay my bills! What a clod!
Hey! Its about* personal responsibility*, young lady! Bankers (and their servants) are very big on personal responsibility! I mean, you act like its your money!
If you don’t mind my asking, how old are you? Nowadays home ec is not often offered, and when it is it’s coed. My junior high in the mid-80’s required everyone to take it.
“Taking away from academic subjects”? I was taught compound interest in math which, last I checked, was an academic subject.
Not secured cards, at least not from reputable issuers. I have a secured card (never bothered to get a card in college since I figured I’d get in heaps of debt) and I think the annual fee is like $29.
Nice cherry-picking there. Here was the original list of things suggested for coverage in school:
Many of those things are very useful to know. I’m even willing to entertain the idea that we should make a place for them in the school curriculum. But they are not academic subjects.