What are the Benefits of College Students Having Credit Cards?
Monday, May 12th, 2008 Subscribe To Our Feed
It was enough when they learned to drive at sixteen. Now they’re going off to college. Most parents aren’t really worried about their children getting a credit card although plastic is preferred by students. The question is, do they really need a credit card?
It happens all the time. If you try to advice your child against doing something, they will want to do it even more and that includes credit cards.
College students are the newest untapped market. While they aren’t children any more, they’re not adults either. Since they can qualify for loans for school and financial aid, they actually represent millions if buying dollars.
Credit card companies often make deals with colleges to distribute applications to their students in exchange for credit cards that carry the college logo or school name. It’s too bad that those applications are not accompanied by some literature or a course in money management. When the college students qualify for those high credit limits, they don’t account for the fact that they don’t have the income to repay their purchases.
The question shouldn’t be if the college student should have a credit card but who should give them one. Most times they will get one even if the parents don’t want them to. To avoid some of problems, the parent can supply the student with a card.
You can add your college student to your own credit card account. You can have a card issued to them in their name but where you can see what they purchase on the account. Set some ground rules and see what becomes of the situation. If good money management has been a part of their life up until then, the student will have a fighting chance of resisting the temptations of plastic.
Make sure you review the statements with them monthly. You can do this in person if they come home on weekends or maybe over the phone if they are away attending school. Setting up payments helps to keep them accountable and they will need this guidance from you.
You can also open a bank account and give the student a debit card that could be used like a Visa or Master Card. You can set a “credit limit” for them by adding a certain amount of money each month. If they can manage this money over time, it may be a way of showing that they are ready to get their own credit card.
College students probably don’t even know what a credit score is but it’s certain that their parents do. Ease them into the world of plastic by letting them prove themselves and keeping their credit sound.
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