As your son or daughter heads off to college, there are a lot of things that they will be learning about—and managing their finances is one lesson that needs to be taught before they pack their bags.
How students get into trouble
When college students are first living on their own, there is a lot of freedom that they are enjoying and learning to handle. They are flooded with credit card offers on campus that come with free t-shirts or CDs. And they think that a credit card is no big deal and something that will help them get the things that they want.
Unfortunately, credit card companies realize that college students aren’t all that knowledgeable about credit cards and capitalize on that, causing thousands of dollars in debt outside of school loans. But there are ways to teach your child how to handle a credit card.
Credit cards aren’t a bad thing
While it might seem like a simple solution to forbid credit cards entirely, this can also be an opportunity to teach your child how to handle their money. Start by applying for cards with both of your names on it and with a low limit. This allows both of you to have access to the card while also giving you a statement each month to see what the child is spending money on.
Budget out a limit for each month and then have your child pay that off or make it clear that they will pay it off during the following summer. This can teach a college student not to pay for things that they can not afford.
The best card will do this
The best student credit card will have a low limit that your child will need to watch in order to stay in a good credit standing. And they can use it to buy their school books safer than they could with cash.
And for emergencies, the card can be used to cover unexpected costs, but only when you have gone through a repayment plan to help them learn that money that is spent on a card needs to be repaid.
The best student credit card will also allow the student to gain rewards for their purchase, perhaps cash back or gas money for trips back home. even though they won’t be spending a lot on the card, it can help to see how credit cards can be used responsibly
Labels: Student Credit Cards
