College and credit cards: A good mix?


Your child is off to college in the fall. Should they pack a credit card along with the boxes and bags?

If you’ve gone back and forth about whether or not it’s a good idea to send your child to college with a credit card, you aren’t alone. Opinions are divided, both among parents and financial advisors. The outcome depends on the kids and the parents.

On one hand, there’s a potential that everyone will benefit. If your child uses the card for budgeted expenses and then pays off the balance each month, they’ll start to build good credit history. You’ll sleep better knowing your child has a credit source in case of emergencies.

On the other hand, if your child isn’t used to managing money or living within a budget, they might fail to make payments on time and end up with bad credit history. Worse, you may have to step in to bail your kid out.

Here are some tips to help minimize the risk of your child’s credit card experience going south:

• Set ground rules. Agree on what the credit card may and may not be used for while at college. Put the agreement in writing and have your child sign off.

• Establish a budget. Talk regularly about how your kid is managing their expenses within the budget.

• Consider alternatives to a credit card, at least for freshman year. Consider using a prepaid credit card, or set up a checking account with a debit card. This may allow your child to gain experience managing expenses within a budget.

Finally, remember you may have no say in the matter. Students are bombarded with credit card offers as soon as they enroll. Credit card companies are usually happy to issue a card to any student over age 18 in his or her own name.

It is a shame that they do not teach life skills in High School like reconciling a checking account, managing your credit score, smart saving and even smarter spending, living on a budget, etc. But remember… are the parent, you are their first resource for these skills. Work with your student to get them on the road to smart financial living. Credit Cards ARE NOT cash, they are not for buying what you cannot afford. In my daughter’s case, she knows that the credit card is for school books and supplies and emergencies. She always calls me first if she needs/wants to put something on the credit card that is not usually allowed.

Help you kids build better futures by teaching them how to handle money and debt.


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