Kids are big spenders

April 25, 1993|By Knight-Ridder News Service

Parents may be broke, but their children certainly are not, says James McNeal, a professor of marketing at Texas A&M University.

According to Mr. McNeal, American children 4 to 12 years of age control about $15 billion a year, and that amount is growing at an annual rate of about 20 percent.

"Believe me," he said, "their income is increasing at a much more rapid rate than yours and mine."

Most of that money comes from parents who pay their children to do household chores, Mr. McNeal said. Only a small percentage comes from traditional allowances.

As households become more hectic, parents are asking their small children to become more self-reliant, and that means giving them more money.

"This is the first time we have seen a redistribution of wealth inside the household like that," Mr. McNeal said.

The news keeps getting better for consumers who shop with plastic:

Credit-card interest rates recently hit record lows, says RAM Research Corp., of Frederick.

As of April 1, bank-issued cards were charging an average annual rate of 16.47 percent. The previous low was 16.89 percent in 1978.

In the last two years, credit-card rates have dropped an average of 2.06 percentage points.

Despite the decline, most credit-card rates still are no bargain. At 16.47 percent, the average rate is considerably higher than the prime lending rate, which is 6 percent.

"Not only are consumers price shopping when it comes to selecting or re-evaluating a credit card, consumers are also . . . picking cards with the most acceptance," Ram says.

For example, American Express and the Discover card, which are not accepted by some merchants, have been losing customers, the research report said.

For people looking for a low-rate card, try First Consumer Bankcard, of Richmond, Va., (800) 952-3388. It has a card with a current fixed rate of 6.9 percent. But on July 1, 1994, it will switch to a variable rate, starting at 11.9 percent.

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