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A Parent’s Guide to Credit Cards For College Students
Frankly, there are almost as many arguments against getting a credit card for your child in college as there are arguments for it. Let’s look at some of them below:
- In a few years, your child will finish college and hopefully start an independent adult life. To get a car or apartment loan, your child needs a good credit history. An important factor in determining a credit history is how long it has been maintained. By allowing your 18-year-old to get a credit card and making sure he or she uses it responsibly, you can keep your child on good credit for years before needing a loan.
- Conversely, if your child is having trouble using credit cards responsibly, he or she is likely to start damaging his or her credit history and could face serious problems later. A bad credit history at 18 could continue to affect your child at 25.
- As a college student, you can’t expect your child to have tons of money at his or her disposal at all times. Credit cards can come in handy in emergencies like when your car breaks down.
- On the other hand, there are other options, such as debit cards with the Visa or MasterCard logo, just in case.
valuable knowledge and experience
- As your child enters the workforce, he or she needs to be more informed about credit card offers, loans and banking services. The practice and familiarity with your child (at such an early age) of learning and comparing credit card terms, interest rates, incentives, services and solutions before choosing a credit card will help prepare him or her for the future.
- Plus, gaining experience in using your credit card responsibly is extremely valuable. This could be an ideal opportunity to develop god spending habits.
- Even if your child makes the mistake of keeping a balance or making a late payment, it may not be that serious (if you correct it in time), again providing him or her with a very valuable life lesson.
Now that we’ve looked at three of the most compelling reasons to allow your child to get a credit card in college, let’s examine how you can guide him or her to use it responsibly (that is, if you decide to give your child ).
- Shop around for the best offer. Involve your child in the process from start to finish.
- Teach your kids to research aspects of credit cards, such as interest rates and late fees, so they can make an informed decision.
- Explain the importance of reading the fine print and read the contract with your child before signing up for any card.
- Make sure your child fully understands interest rates, minimum payments
- A source of low APR cards so that if your child has any balances to pay back, as little interest as possible will be charged.
- Some cards offer no annual fee. go find them. Save that money for yourself and your kids.
- Get a card with a lower credit limit. College students don’t need to have a large credit limit, and it will avoid any temptation to overspend.
- Make sure your child pays on time. Since college students lead very busy lives, it is possible to miss a payment. Late fees can easily add quite a bit to your bill.
- Prohibit your child from taking cash advances. Their interest charges can be as high as 20%.
- Encourage your kids to use credit cards for emergencies. Getting into the habit of using the card haphazardly could end up causing him or her to have a negative balance on the account. Don’t make your child feel comfortable with the thought of being in debt.
- You might consider reviewing the credit card statement with your child and offering appropriate advice.
- Discourage your child from owning more than one credit card. A college student does not need to carry more than one.
Ultimately, the decision is yours. You know your child best, and you know if he or she is ready for that kind of plastic. Even when you’re sure your child is ready, it’s important that you provide him or her with the proper instructions for use.
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