College Student Credit Card Tips

Do you have a young adult heading off to college? If so, now’s the time to make sure they know how to manage money.

Without guidence, many young people develop bad money habits when they’re first on their own. Many pay a big price for years to come.

Share these credit card do’s and don’ts with your college-bound son or daughter.

  1. Have them apply for a debit card
    If you don’t want your child linked to your credit accounts or you’re concerned about his or her money-management skills, suggest a debit card for paying bills. Debit card users can set up email alerts as notifications when their balance runs low.

    It’s a good way to help students effectively manage their money without worrying about the hassles of writing checks for day-to-day purchases.

  2. Make your student an authorized user of your credit card
    While recent federal laws restrict credit card marketing on campuses, students can still be inundated by offers with their own cards. As an authorized user on your credit card, you can monitor your child’s spending.
  3. Consider the benefits of secured cards
    If you want your college student to establish a credit history during her college years, an alternative way for her to achieve this goal is by applying for a secured credit card. Your student can manage that account on his or her own, or you can serve as a joint account holder.

    Just like traditional unsecured credit cards, secured credit cards help people build credit by reporting one’s payment history to the credit bureaus. But these cards differ from regular, unsecured cards in one significant way.

    Secured cards require a security deposit, which then becomes the credit line. For example, if you put $500 on deposit with a bank, that bank can provide your child with a secured card that has a $500 credit limit.

    Parents who are co-users of their child’s secured card would have access to that account but could choose not to use it.

  4. Discourage your child from applying for several cards in a short time
    Suggest to your child that they be selective in choosing which credit cards to apply for. All credit card applications show up as hard inquiries on a credit report and lower credit ratings.
  5. Set specific guidelines and spending limits
    Whether or not you add your child to one of your credit card accounts or they apply for a separate credit card, it’s important to talk to your child about the prudent use of credit and when credit cards should not be used.

    It’s far too easy to lose track of money spent while in college, with tuition bills each year — not to mention books, supplies, food and other expenses.

    Create realistic spending limits and urge your child to stick to those limits. Recommend that they avoid using credit cards for routine day-to-day purchases that could easily be paid for with cash. Avoid big-ticket items that he or she may not be able to pay off within a few months.

    Similarly, if you want your child to use the credit card for emergencies only, say so.

By following these credit card do’s and don’ts, your son or daughter can learn lifelong money-management skills and keep credit card debt to a minimum — even while he or she is pursuing a higher education.