Friday, November 1st, 2013
In a study that is surprising many parents who worry about their children’s financial common sense, researchers have found “no compelling evidence” that young people are “bad borrowers” or at elevated risk for having credit problems. More from Today.com:
The key findings:
- Credit cardholders under the age of 21 are substantially less likely to experience a serious delinquency (90 days or more past due) or default than those who get one later in life.
- Someone age 40-44 is 12 percent more likely to have a serious default than a 19-year-old.
- Those who get a credit card in their teen years are also more likely to get a mortgage while young.
“There are some big benefits to getting a credit card early, so parents don’t need to freak out about it,” said study co-author Andra Ghent, assistant professor in the W.P. Carey School of Business at Arizona State. “They may well be able to manage it just fine.”
The authors reached that conclusion after studying nationwide credit card data collected by the New York Federal Reserve Bank for 2005 to 2008. To examine the cardholder’s behavior without the influence of a parent or guardian, anyone with a cosigned card was excluded from the analysis.
The data did show that young people are more likely to experience minor delinquencies (30 to 60 days past due) than older cardholders. But, as they learn from their mistakes and figure out how to make payments on time – such as setting up automatic bill pay – the frequency of these minor delinquencies drops.
Prof. Ghent believes making small mistakes with credit early in life can prevent major ones later on.
Plus: Curious about what career your child may have? Find out with our fun quiz!
Image: Teen with credit card, via Shutterstock
Add a Comment
Wednesday, January 9th, 2013
Walt Disney World is revealing plans to launch a new way of experiencing its parks–an electronic bracelet encoded with credit card information and technology to enable guests to make purchases within the parks and be notified when they are at the front of the line for popular rides. But even though Disney says the “MyMagic+” initiative will make a Disney vacation far less complicated for its estimated 30 million annual visitors, the system is raising some eyebrows among those who are concern with the privacy issues inherent in any data collection and “customized” marketing. From The New York Times:
The initiative is part of a broader effort, estimated by analysts to cost between $800 million and $1 billion, to make visiting Disney parks less daunting and more amenable to modern consumer behavior. Disney is betting that happier guests will spend more money.
“If we can enhance the experience, more people will spend more of their leisure time with us,” said Thomas O. Staggs, chairman of Disney Parks and Resorts.
The ambitious plan moves Disney deeper into the hotly debated terrain of personal data collection. Like most major companies, Disney wants to have as much information about its customers’ preferences as it can get, so it can appeal to them more efficiently. The company already collects data to use in future sales campaigns, but parts of MyMagic+ will allow Disney for the first time to track guest behavior in minute detail.
Did you buy a balloon? What attractions did you ride and when? Did you shake Goofy’s hand, but snub Snow White? If you fully use MyMagic+, databases will be watching, allowing Disney to refine its offerings and customize its marketing messages.
Disney is aware of potential privacy concerns, especially regarding children. The plan, which comes as the federal government is trying to strengthen online privacy protections, could be troublesome for a company that some consumers worry is already too controlling.
Image via Marketplace.org
Add a Comment