Calls to raise the legal minimum age for credit card applications to 21

Rising levels of bankruptcies amongst young people has prompted calls from debt management specialists Debtmatters to raise the legal minimum age for applying for UK credit cards to 21. By doing this they hope that people will take the issue of being in debt more seriously, and realise the dangers of being in heavy debt so young.

Debtmatters operations director Michael Shirley is worried about the shift towards reliance on funding lifestyles on credit cards. He said: “We are living in a buy now, pay later culture in which many people consider being in debt to be perfectly normal and nothing to worry about. “ Believing that people develop the habit early on, Shirley thinks that delaying the ability to get credit card deals until later in life is a good way of instilling better financial discipline. He points out that reckless spending earlier in life coupled with high interest rates can create a burden of debt that is almost impossible to remove, leading to crippling financial situations that could give rise to bad debt ratings and even bankruptcy.

Shirley added: “Raising the age at which young people can legally access credit cards would provide a short-term solution and allow us time to agree a sustainable long-term solution.” Regarding that long-term solution, Shirley believes that financial management classes educating youngsters about financial independence and the dangers of accumulating debt, should be run in schools, colleges and universities.

Barclaycard, while not going so far as to ridicule Debtmatters call for the raising of the legal age, suggested that cards were vital for helping students through their studies. “Cards can be a lifeline for students managing a tight budget,” said Barclaycard UK cards managing director Amer Sajer. “They can help students make the most of their time at university as well as establishing a good credit record – but only if used sensibly.” he added.

However, ‘using them sensibly’ is the key, agree both Debtmatters and Barclaycard, but unfortunately the evidence suggests that many youngsters don’t. And that starts with the application process were many don’t compare credit cards and the benefits they bring, considering things such as affinity or reward schemes far more important than the interest rate they will have to pay on outstanding balances. Many are also quite happy to run up debt paying huge amounts of interest each month, while only repaying the minimum amount.

Students believe that their debt is only temporary as it will be repaid once they get a job upon graduation, and in many cases that may well be true. However, with the average 2006 graduate leaving university with a debt of £13,501, it may be more likely that they will be looking forward to a long period of being in debt, meaning that Shirley’s plan to introduce financial management classes may well prove extremely helpful.

Adam Singleton is an online, freelance journalist and keen amateur photographer from Scotland. His interests include travelling and hiking.