Wednesday, September 10, 2008

Teen credit tied to GPA, quiz, parent consent

SWARTZ CREEK, Mich. (9/10/08)--Financial Plus FCU, Flint, Mich., is offering youth credit union accounts with cards based on grade point averages (GPAs), scores on a financial literacy quiz, and parental consent.

The program, Fine Tune$, offers youth ages 16 to 18 the opportunity to open a savings account, free checking account, and have a Visa debit card and credit card with a minimum balance of $200 and maximum balance of $500. Annual percentage rate is 5%.

Upon receiving the account, students will receive gift cards for free music downloads.

"The response has been phenomenal," Raul Alvarez, Financial Plus marketing director, told News Now.

To qualify for Fine Tune$, students must complete a 45-minute Powerpoint-based "Dollars to Downloads" training course through the credit union's website, have a 2.5 (GPA), and parental consent.

"Dollars to Downloads" teaches students how to set savings and spending goals, learn money management and credit score facts, how to write checks and keep a check register, and how debit and credit cards work. The questions for the test are pulled from the course material.

"We want to make sure teens understand the basics," Alvarez said.

If the students fail the test, they can re-take it until they pass. If they fail, they are still eligible to open a savings account. Financial Plus "doesn't give out credit cards--youth have to earn them," Alvarez said.

"The innovative part is the educational piece," he said. "It's an added responsibility they can earn--it's not automatic."

For the cards, the credit union uses a student's GPA like a credit score. "It's a good indicator," Jeannette Van Dusen, Financial Plus teller operations manager, told News Now. "Kids under 18 don't have a credit score, and we want to show them how important it is [to have a good score.]"

Parents also must sign a consent form for students to receive a credit card. When students receive their first credit card statements, they are invited to the credit union to talk with their personal financial representatives about how to read the statements.

"We're finding that kids love fast food--especially that fast food restaurants take Visa," he added.

Financial Plus sends out text message reminders to students about the statements, and can also send out messages if a student's account drops below a certain limit. "They're notified immediately if something happens to their account," Van Dusen said.

Financial Plus also is appealing to students through music by allowing them to receive more free downloads referring friends. "Kids are defined by their music," Alvarez said. "We're trying to make sure we're staying with them."

Alvarez recently went to a local school, Swartz Creek High school, to promote FineTune$ during orientation. The credit union handed out Krispy Kreme doughnuts to students and talked to them about the program.

Financial Plus has received some comments about the risks involved with giving teens credit cards. But Alvarez said the teens are bombarded with credit cards at college campuses, so "we want to make sure they're ready for that," he said.

The credit union also will transition youth members into full-fledged memberships once they turn 18, he added.

The credit union partners with Swartz Creek High School to teach financial literacy and recently installed an ATM in the school's cafeteria. The credit union also expanded its charter to two other counties, and expects FineTune$ and its financial literacy programs to grow, Alvarez said.

"The parent, financial representative [from Financial Plus] and the teen--those pieces work well together," he added.

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