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Parents: Teach Your Teens Not to Make 3 Big ATM Card Mistakes

Parents: Teach Your Teens Not to Make 3 Big ATM Card Mistakes

When does a single iTunes song cost $35.99? When the purchaser uses a debit card to buy it for 99 cents, goes over his bank account balance, and gets slapped with a $35 overdraft charge. This happens more than you think — often to young people.

These days almost any basic checking or savings account comes with a free ATM or debit card. That means even a first-time bank-account holder — like your teen — will have immediate, convenient access to his cash anywhere, day or night. Great news, right?

Nobody but you is going to teach your teenager how to handle that card responsibly. The bank won’t do it. Teachers won’t do it. So it’s up to you. Here are a few common pitfalls of mismanaging a debit / ATM cards — and ideas to teach your teen how to avoid them.

Mistake 1: Wasting money on ATM fees.

If your teen is out with friends and needs cash, she’ll be tempted to use her ATM card at whatever machine is close by. Usually, that will mean an ATM not owned by your teen’s bank — and using it to pull out a few bucks will probably result in a high fee.

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Bankrate.com’s 2011 Checking Account Survey found the average ATM charge in the US was $2.40. Plus, your teen’s bank might charge an additional fee for using another institution’s ATM. That could mean paying $4 or more just to access $20 — an insane 20% interest charge just to pull out her own money! If your teen uses her ATM card regularly (say, once a week), she could pay hundreds of dollars per year in needless ATM fees.

The lesson: Plan ahead.

Teach your teen to plan ahead, to withdraw money only from her bank’s ATMs, and to do so before she needs the cash. You can also use this opportunity to teach your teen how to budget.

Mistake 2: Overdraft charges.

Most bank accounts allow overdrafts on ATM card usage at stores or for other purchases — and charge high overdraft fees for the privilege. Worse, your teen won’t have any notification he’s about to go over his account balance — and get hit with a big fee — until it’s too late.

If your teen spends just a few dollars over his balance using his ATM card, that mistake could cost him $35 in overdraft charges (the average fee for overdrafts in 2011, according to Bankrate.com).

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If this happens regularly, because your teen does not keep accurate records of his account and does not know how much he has at a given time, your teen could face hundreds of dollars in fees each year. Over time, these mistakes can negatively affect your teen’s credit report — which can be extremely costly in the long run.

The $35.99 iTunes song

This actually happened to someone I know. She bought a few songs on iTunes using her ATM card; and the last song apparently took her bank account into negative territory. Meaning that last song, at 99 cents, actually cost her $35.99!

The lesson: Know what’s in your account at all times.

Teach your teen to keep accurate records of his bank account, and to monitor it regularly, so he never spends over his balance and gets hit with nasty overdraft penalties. Tell your teen the above story to illustrate why it really does pay to know how much he has in his bank account before using his ATM card.

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Related suggestion: The “carry-the-receipt” rule.

If your teen uses her debit / ATM card at a store, a gas station, the movie theater and an ATM — but doesn’t keep a record of these transactions — how will she know at any given moment how much money she actually has in her account?

Teach your teen to carry each receipt, for every withdrawal or purchase she makes with her ATM card, until she’s back home and able to record these items in whatever she uses as her official record for managing her bank account — her checkbook register, for example.

I purposely fold my receipts and tuck them into my wallet so they stick out. That way, I can’t help but notice them when I pull out my wallet, and therefore I can’t forget to record them. Only after I’ve recorded a receipt in my checkbook register will I throw it away (or file it).

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Problem 3: Physical danger from thieves.

ATMs attract muggers and other bad characters, because they know that anyone using one is just a few seconds away from having cash in their hands.

The lesson: Use ATMs only in safe situations.

Teach your teen to minimize the danger of ATM withdrawals by limiting her ATM usage to certain situations, like these:

  • Use an ATM only during the day, if possible.
  • Find an ATM indoors, either enclosed in a vestibule at a bank or inside a store, such as a supermarket, someplace that is populated and well-lit.

Taking the time today to teach your teens how to handle a debit / ATM card responsibly can make a huge difference in their financial future — the difference between enjoying the card’s convenience over the long term, or suffering serious financial problems from mishandling it.

Featured photo credit: Junk ATM/Robbie Hyman via Shutterstock

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robbie hyman

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Last Updated on April 3, 2019

How to Nix Your Credit Card Debt in Less Than 3 Years

How to Nix Your Credit Card Debt in Less Than 3 Years

Debt is never a fun thing to be in. But, there are many actions that you can take that will help you rid yourself of the burden of debt once and for all.

By coming up with a set plan, eliminating your debt can feel much easier than constantly thinking about it.

This post will provide some tips on how you can do this to help you nix your credit card debt in less than 3 years.

Hint: there are ways that are easier than you think.

1. Consider Consolidating Multiple Credit Cards If Possible

This may not be applicable to you, but if you have multiple cards – it is something to consider. Keeping up with multiple bills is time consuming.

It will depend on the balance you have on each. Consolidate ones you can but do not do it to the point that you get too close to the maximum limit. Also, it is ideal to pick the card with the lower interest rate.

Consider if there are any fees or alternatively, rewards, with transferring a balance to another card. Watch out for fees. Note that some cards offer rewards for transferring a balance to them. This is extra cash that can help go towards paying off your debt.

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Having one or two cards can make nixing your debt much simpler than keeping up with the balance of a bunch of cards. Keeping track of paying the minimum towards a bunch of cards is time consuming. Spend the time to consolidate instead to make the overall process simpler going forward.

My tip: Have one main credit card. Have a second one that you use for necessities – such as groceries or gas – that offers rewards for those purchases (a lot of cards do) and set the second one on auto-pay. You should be able to pay off a smaller amount on auto-pay if it is a necessity. If you think you cannot, then you may need to cut down a lot on expenses.

Why do I suggest doing this? Having one thing set to auto-pay is one less thing to think about. One less thing to waste time on. Same idea with consolidating to one main card. Tracking down too many is a hassle.

2. Try to Pay the Full Balance You Spent Each Month at the Very Least

You need to pay off the amount you are spending each month when that bill comes in. This is the amount you spent THAT month.

Do not let the debt keep accruing while you work on paying any unpaid debt that has accrued. It will become a never-ending battle. Try as best as you can to be current on paying for each month’s expenses when that month’s bill comes out.

If this is a strain, consider why. You may need to cut expenses. Or you may need to consider other cards. Or look at where this money is going.

3. Pay Extra When You Can – Every Small Amount Counts

This cannot be emphasized enough. If you are looking at a lot of credit card debt, it can look daunting, but each extra amount that you can put towards the debt will really add up – no matter how small it is.

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It does not just reduce the principal amount that you have left to pay off, but it reduces the amount that is collecting interest. You will always save money with that reduced interest.

4. Create a Plan on How to Pay Extra

Back to the main point, having this plan is giving you one less thing to think about.

This plan should be a plan that works for you. If it does not work for you, your spending habits, and your views on debt, then it will not be an effective plan.

For instance, if a set plan of an extra $50 (or another amount that you know you can afford) works for you, then do that. Set that aside every month and pay that extra amount. Treat it like a bill. Choose an amount that works for you and pay it like clockwork as though it was a bill you had to pay each month.

Little amounts will not nix it entirely, but they will help tackle it and having a set plan can make it less of a chore. Creating a new plan of how much to put towards it each month is an unnecessary added stress.

5. Cut out Costs for Services You Do Not Use

If you are signed up for subscriptions that you do not use because of some free trial or for some other reason, cut it out. Your overall financial position will look better.

In turn, that will make cutting your credit card debt easier. Look at your statements to find these expenses. If you do not use them, you may forget you are paying some unnecessary amount each month. Cutting it out can really add up in savings that you can put towards other needed expenses.

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6. Get Aggressive About It

Consider these points:

Depending on the interest and the level of debt, you may need to give up a few indulgences. For example, instead of ordering delivery or going out to eat, cook at home. Everything adds up.

Other things may be more of a sacrifice. It may be a trip you wanted to go on, or a daily latte habit you’ve picked up. In these instances, consider how important it is to you and if it’s worth the sacrifice. And if it is a costly expense, think whether you can wait to indulge.

Cutting an extravagant expense can really help make a dent in your overall debt. Try not to add to debt when you are trying to pay it off. It will be a never-ending battle. Make it less of a battle with these tips and it will feel easier.

Bottom line: Do what you can to make this process easier for you. Implement steps that do this. It takes time now, but will help overall. Also, keep track of your spending and paying down of your debts. Which is the next point.

7. Reevaluate Your Progress at Set Intervals

Doing a regular check-in can help you see your efforts pay off or maybe indicate that you need to give this a bit more effort. If you check every 3-6 months, it will not feel so much like a chore or feel so daunting.

By doing this, you will be able to better understand your progress and perhaps readjust your plan. Bonus: if you see it pay off, it will feel great to do this check-in. You will get there.

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Finally (and most importantly)…

8. Keep Trying

Do not get discouraged. Pushing it off will make it worse. Just keep trying.

Once your debt becomes lower, each monthly payment will reduce the balance more. Why? You are paying less towards interest. It will be a snowball effect eventually and it will become much easier to manage. Just get to that point. And know once you do, it will feel easier and motivating.

Start Knocking out Your Debt Today

The best way to eliminate debt is to get started right away. Begin by implementing the above steps and watch your debt just melt away. Try out some of the above strategies and see what works best for you. Soon you’ll be on your way to a debt free life.

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Featured photo credit: Pexels via pexels.com

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