There was nothing unusual about the credit card pitch on the outside of the envelope. You've gotten dozens of them over the years, perhaps even hundreds, and they all look or sound about the same: an initial low interest rate, perhaps some airline miles, perhaps even the promise of "no annual fee," which always amuses me. How nice of the credit card company not to charge us for the privilege of using the card on which they make money.
There was even the option of choosing one of 15 credit card designs, which included an image of wild horses, an eagle, roses and the U.S. Constitution.
No, there was nothing unusual about the pitch except one element: It was sent to my son, Roy.
Roy is a smart kid, but to any teen, this offer could be enticing: no interest until April 2011, no annual fee and no liability, if the card is used after it is lost or stolen.
Still, he handed it to me after declining to apply for credit thinking that I would be interested in their pitch.
To its credit, the credit card company did not hide the fact that after the initial interest-free period, the annual percentage rate (APR) for purchases would be 24.9%. But you have to look a little harder to find the 29.4 APR for not paying your bill on time and that the late payment fee on top of the huge interest could run as high as $39.
Americans love their credit. According to a 2006 U.S. Census Bureau report, the stack of about 1.5 billion credit cards in use in the U.S. would reach more than 70 miles into space and be almost as tall as 13 Mount Everests.
Credit card companies target students such as Roy because they can be prolific users of credit. Consider these statistics from the Sallie Mae report, "How Undergraduate Students Use Credit Cards," April, 2009:
•Eighty-four percent of the student population overall have credit cards, an increase of about 11% since the fall of 2004.
•Half of college undergraduates had four or more credit cards in 2008. That's up from 43% in 2004 and 32% in 2000
•Since 2004, the number of students who arrived on campus as freshmen with a credit card already in-hand has increased from 23% to 39%.
•Undergraduates are carrying record-high credit card balances. The average balance grew to $3,173, the highest in the years the study has been conducted. Median debt grew from 2004's $946 to $1,645. Twenty-one percent of undergraduates had balances of between $3,000 and $7,000, also up from the last study.
•In the spring of 2008, 15% of freshmen had a zero balance, down from 69% in the fall of 2004. The median debt freshmen carried was $939, nearly triple the $373 in 2004.
Part of the reason students make use of available credit is because they are doing what their parents did. Further, they have been misled into believing that the best, easiest way to "establish their credit" is through the use of credit cards.
Americans have been very busy pursuing high credit scores, believing that that is the secret to a stress-free financial life. The truth is that the best credit score is not in the 700s or higher, but zero.
That's right, zero, as in not owing anyone anything, or at least not owing anything that is tracked and reported through a computer.
Credit debt is a chronic U.S. condition that can severely hurt families for many years. But because that credit spending fuels so much of the economy, there are very few at the top levels of our government who are urging us to pay cash for our purchases.
Credit cards are not the boogeyman. When paid off each month, they can be a convenient way of living. But too many Americans do not pay their balance in full each month.
Our children need more education on handing credit responsibly. As with other life lessons, their best teachers should be their parents, but too often, Mom and Dad are working too hard to pay down debt for them to be a good role model.
STEVE SMITH is a Costa Mesa resident and a freelance writer. Send story ideas to firstname.lastname@example.org.