A couple of years ago, I came across this eye-opener of a story: Hasbro, the maker of game of LIFE, which had used fake money since 1960, introduced a "Twists and Turns" version featuring a Visa-branded card!
Is a toy credit card any different from those candy cigarettes that I thought were a thing of the past (yet, shockingly, they're still around)?
Let me explain. Credit cards and cigarettes both have a terrible downside to them (deep debt for the former; health problems for the latter). It's one thing for companies to market fake toy imitations of the real things adults have. But I draw the line when the real thing has such a downside to it.
The fake money is just fine--it's simple for kids to understand; you use it to buy things, and once you use it, it's gone, so you have to use it wisely. The downside for credit cards, on the other hand, is much worse: They give you the ability to spend money that you don't really have. There is an element of responsibility involved that most children don't even grasp as teenagers.
What's even scarier, children are learning about credit cards on their own.
One of my friends on Facebook has a daughter, who asked for a credit card for Christmas. She said, "Thankfully my husband's been telling her every time she asks for a credit card that she can't have one until she's 18. I think we need to start teaching her now to be responsible with her money. I'm hoping she'll also learn a bit from us since we're saving up for things around the house and not just buying like mad on credit."
Even toddlers are grasping the concept of credit cards.
I added that not only do children need to learn how to be responsible with money, but unlike past generations, today's children will, later in life, will have the added challenge of learning how to use credit responsibly. The temptation to use credit irresponsibly is tremendous, especially in a world where governments and corporations do "deficit spending" on a regular basis.
My Facebook friend said, "Exactly! That's one of the things that really bothers me. How can anyone expect our children to learn fiscal responsibility when our government and various large corporations can't set a good example? That makes the children think Mom and Dad are just being boring old fuddy duddy penny pinchers, (as opposed to) financially responsibile people."
The one way that I fear people use credit irresponsibly is this: they could theoretically treat credit cards as "hypothetical future money"; they could also--again, theoretically--keep their creditors at bay by juggling credit card balances (e.g. using a balance transfer from Card A to pay Card B, using a credit card check from Card C to pay Card A, and taking a cash advance out on Card B to pay Card C; this just boils down to "robbing Peter to pay Paul" and temporarily hiding their debt problems).
And in the end, is it all that different from what Enron did a decade ago--spending money they never had to look like a much bigger, much more profitable company than they really were, then hiding those debts through various means such as legal loopholes and "special purpose entities"?
If there's any consolation, it's that credit cards banks don't hand out credit lines the way they did in the '90s and the early to mid-2000s. But the elements of responsibility and temptation will always be there no matter what.