HOW TO BE YOUNG AND GO BANKRUPT IN 15 MINUTES

Our older son graduated from college two years ago.  He's living in Atlanta, working as a self-employed film maker.  What that means is he doesn't make a lot of money. I'm guessing he made about $15,000 last year.  Anyhow, he's been living without a credit card since he graduated college. When he came home for Christmas the wife and I decided we would co-sign for a credit card in his name.  We were concerned that living without a credit card had to be difficult since there are situations where you simply have to have a card to pay for something; plus he was not generating any kind of credit history which could be problematic later on his life. 

With that in mind, and knowing he would not be able to qualify for a card on his own, as a Christmas/Birthday gift we applied for a card in his name.  We went to the local credit union we belong to (I'll keep the entity's name private).  Literally fifteen minutes later we were standing with a friendly credit union employee answering a series of questions on income, debt, etc.  The nice credit union employee typed all of the answers into her computer and five minutes later told my son he qualified for a card with a credit limit of ... get ready for this ..........................  $25,000.   I was so dumbfounded I asked the lady to repeat the number.  What in the world !!!  Absolutely not.  First off, my credit limit is only $15,000.  I make 100 times more money than my 24 year old.  I've had a credit card for thirty years; never missed a payment, and have a credit rating that is stellar.  My limit is $10,000 less than what my marginally employed son was just offered?   

After I got over my initial shock I asked the credit union employee how do I decline the $25,000 limit and set it lower?   Much, much lower.  She seemed puzzled by the question.  Apparently that request doesn't come up very often.  In fact, many people ask how they can increase their credit limit.  After a series of phone calls and emails, she told us it could be done.  We settled on a $1,500 limit.  When I explained I had not interest in being personally liable for $25,000 of debit, she seemed to get it.  So there were were.  After 20 minutes my kid has a credit card and a responsible debit limit.

Anyhow, I think I'm starting to understand why so many folks get into financial trouble so early in life ...   $25,000 credit limit.   That's about double what my kid made last year.  What in the world ?