Some high-school kids were asked on a survey whether they owned mobile phones. Almost everyone in the group said they owned at least one phone. When asked whether they incurred any major mobile phone debt, some of them unabashedly nodded yes. Fortunately for these kids, the parents paid out their outstanding debt. Not every kid is fortunate. In UK one in every four young people who own a mobile phone has an accumulated debt. Are you one of those unlucky kids?

Why do teenagers and young adults fall into the debt trap?

Mobile phones have been identified as a major reason for youth debt. For people in the age group of 14-24 years, mobile phones have become very important in keeping in touch with friends. It’s all about contacting friends, socialising through SMS, sending photos, and being cool. Mobile phones are not a luxury item anymore. They are a social necessity and have become fashionable gadgets. And models keep changing — like seasons. For many people in this group, they must have the latest toys at all costs because of peer pressure.

Text messaging is predominantly a teenage phenomenon. Ever since text messaging became popular, mobile phones have been designed with teenagers in mind. Although most carriers require young people to have prepaid accounts with them before offering them postpaid contracts, new carriers have been aggressive in targeting young people with features such as video calling, web browsing, and email accounts. Phone companies have a clear incentive to target young people because of the enormous potential of earning millions through slick advertising and individual promotions. To some extent young people are easy pickings since most of them have little or no financial literacy, are ill-informed and impulsive buyers. And when they get into payment problems, most companies know that parents come to their rescue.

When young people don’t have the money, they first seek help from parents. Having bled them dry, they look for credit elsewhere. Banks and lenders have been particularly criticised for the way they market their products to children. Most young people own a credit card or have a supplementary card linked to their parents’ account. Relatively easy access to credit can often be tempting, and many of these young people are spending well beyond their means, leaving them with debts they have no hope of paying off by themselves. Below are ways to avoid common mobile phone traps:

  • For your first mobile phone, there is no reason to go with anything other than prepaid unless you speak on a first-name basis. And your first phone should come with changeable faceplates.
  • Do you make calls when you are simply bored? Using your mobile phone can become an addiction just like gorging on junk food or smoking, but with more expensive consequences.
  • Keep track of your calls by checking your balance regularly. Most carriers have special numbers that let you check your balance for free.
  • Seek the opinion of family and friends about their mobile phone service. If you find it attractive and within your budget, you should join the same service because most of the time you will be calling your friends and family. Not only will you be able to take advantage of cheaper calls offered within the same network, but you can easily compare monthly spending and calling patterns should something go wrong.
  • There’s no world record for sending 1,000 text messages in a day. You are only setting a personal wallet record that you will remember for a long time.
  • A free phone is always accompanied by a 24-month contract. You will have to pay for the monthly commitments even if you go overseas on school holidays and didn’t use the phone.
  • If your friend or colleague is having no luck getting a phone deal, remind him of options like prepaid or outright phones. The last thing you want to do is take a contract for another person — unless you are prepared to pay for the consequences.

O2 is a telecom company headquartered in London. You can call on O2 Contact Number for any further information.