2006-06-30 / Community

Pheffer:Teen Financial Literacy Important

Assemblywoman Audrey I. Pheffer is urging young adults to recognize the importance of financial responsibility and the consequences of credit debt.

"You probably know a young adult who insists on purchasing the latest technology, whether it is a new portable music player, computer or sleek, gadget-packed wireless telephone. While some teens and young adults use credit responsibly, many use credit cards to buy expensive items that they cannot afford. With credit card interest rates at historically high levels, young adults can easily find themselves in debt. Young adults are also increasingly becoming trapped in a cycle of debt that they are often unable to extract themselves from until they are well into their twenties and, in some instances, their thirties," said Pheffer.

Credit card companies often set up tables on college campuses and entice students into opening new accounts by offering free gifts like T-Shirts, CD holders and candy. These companies hook students with low introductory interest rates which often increase rapidly after the initial rate period expires. In addition, many students do not realize that these credit card contracts often contain an annual fee of between $15 and $55.

According to the Federal Trade Commission (FTC), eighty percent of undergraduate college students have at least one credit card. Of these students, twenty percent have four or more credit cards. The FTC statistics show that twenty percent of undergraduate cardholders carry between $3000 and $7000 of credit card debt, while twenty-five percent of students have a whopping $10,000 or more of credit card debt. "Most young adults do not realize that such high debt loads can adversely impact their credit history, which can limit future opportunities. Credit reports are used by creditors, insurers, employers and other businesses to evaluate an applicant's financial history and credit worthiness, and can affect whether they get credit, insurance or even a job," said Pheffer.

When used responsibly, credit cards can be a convenient way to pay for products and services. The FTC offers these tips to young cardholders. First, keep track of how much you spend, and be aware that incidental and impulse purchases add up fast. Second, save your receipts so that you can compare them with your monthly bill and promptly report any discrepancies to the credit card company. Lastly, never lend your card to anyone.

As with many consumer issues, the key to protecting young adults from getting themselves into trouble with credit lies in increased awareness and educational efforts. One such effort sponsored by the FTC's Northeast Regional Office, entitled "Project Credit Smarts", brings speakers and educational materials to colleges and universities in New York and Massachusetts. As part of this program, the FTC provides speakers to teach the ABCs of credit to freshmen and educational material to the college for distribution among the students, through a freshmen mailing and in the campus bookstore. If you are interested in encouraging your child's college or university to participate in Project Credit Smarts, visit http://www.ftc.gov/creditsmarts/. For more information on responsible use of credit geared toward young adults, please visit the FTC's Focus on Finances website at http://www.ftc.gov/focusonfinances/. Meeks Issues Statemen

Congressman Gregory W. Meeks reacted angrily this week to the release of a 28-month investigation conducted by the National Community Reinvestment Coalition into home lending practices in six metropolitan areas:

Congressman Meeks, who represents the eastern end of the Rockaway peninsula in the House of Representatives issued the following statement:

"The results of the National Community Reinvestment Coalition's investigation over more than a two-year period are shocking but not surprising in the sense that it confirms the worst of my fears that discriminatory lending practices are widespread and perhaps systemic throughout the United States. The NCRC has done quite a service to the decades long struggle to eliminate discrimination in all phases of the nation's housing market. In this instance, the NCRC used "paired testers" in Baltimore, Washington, D.C., Los Angeles, Chicago, St. Louis, and Atlanta to uncover unequal treatment of minority loan applicants compared with white applicants. I'm only sorry it didn't include my home city of New York.

"The minority and white testers - both couples and single individuals - visited the same brokerage firms, shopping for the same size loan. Although the minority testers had higher credit scores and incomes, they were quoted higher rates and presented fewer loan options than the white testers. Adding insult to injury, the investigation discovered that brokers didn't discuss their fees as often with minority shoppers as they did with whites. In fact, nearly 74 percent of white testers received information about fees, while this information was disclosed to just over 30 percent of the minority testers.

"Brokers offered twice as many loan alternatives to whites than to minorities. For example, 90 percent of the white testers were offered a fixed-rate

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