Credit Cards: Information for Parents and Freshmen

Getting a credit card isn’t hard for an 18-year-old. However, that little plastic thing that fits so easily into every student’s wallet can have big drawbacks.  Are you aware of the you the following facts?

• An 18-year-old can get a credit card without parents' consent or knowledge. 

• Twenty percent of students with credit cards carry balances of at least $10,000.

To help control card debt, some credit card options for parents and college freshmen are listed below.

I

FOR PARENTS:

Get a credit card on your account for your son or daughter.

• Advantages:  The biggest advantage of this is that you get the bills; therefore, you can monitor the spending.  You have control over how much he or she spends, and if he or she crosses the line, you can take the card away.  

• Disadvantages:  Your son or daughter does not have to establish a payment record.  Also, if you’re not careful, your son or daughter can spend to your credit limit.

Be the primary borrower on a new card for your son or daughter.

• Advantages:  Just like giving your son or daughter a card on your account, you still get the bills, but this time you can separate your purchases from your son or daughter’s purchases.  This young adults to build a better and more meaningful credit history.

• Disadvantages:   Your son or daughter does not have to establish a payment record. 

• *Do not co-sign a card in which your son or daughter is the primary borrower.   This makes you legally responsible for the debt, but the bills go to your child.

Get a secured credit card for your son or daughter. (example: you deposit $100 and get a $400 limit)

• Advantages:  You can control the credit limit and at the same time your son or daughter builds a credit history.  Also, your child establishes a payment record as he or she pays the bills.

•  Disadvantages:  You pay the $100 to establish the card, but if your son or daughter goes over the limit, you lose the $100 deposit.

Get a prepaid card for your son or daughter. (example: you pay $500 for a $500 credit card)

• Advantages:  Your son or daughter can only spend what is already on the card.

• Disadvantages:  Your son or daughter does not build a credit history.  He or she may be charged an ATM fee every time money withdrawal.  Also, some cards expire within a certain time limit, and others can't be used in all stores.

NOTES FOR OUT-Of-STATE PARENTS AND STUDENTS:

• Some stores do not take out of state checks, and, in times like these, a credit or debit card can come in handy.

• If you’re still unsure whether or not you want to send your child to college with a credit card, you can always use the option of a debit card.  This will ensure that your child can't spend more than what is in his or her checking account.

• Choose a debit or credit card that allows both parents and the student to review the purchases on-line.  

FOR STUDENTS:

• It is your responsibility to keep track of how much you are spending, not your parents.  

• Set up a plan with your parents on how much they are willing to pay on your credit card each month.  

• Write down each time you use your credit card, and note how much you spent.  

• You only need one universal credit card.  A Visa, Master Card, etc. can be used in almost any store.

REMEMBER:

• A bad credit history can make it hard to get a job, a loan, a car, etc.  

• Know your credit card's interest rate and if it will go up over time.

• Pay off your balance each month.  It’s easy for your unpaid balances to add up!

• Pay on time!!!! A missed payment hurts your credit rating. 

P.S.: 

• Most freshmen probably will survive their freshman year just fine without a credit card.

Adapted from the article "When Your Teenager Wants a Credit Card" by Lynn Brenner