What are the Benefits of College Students Having Credit Cards?

It was scary enough to think of them driving a car at sixteen. Now they are heading off to college. Most parents are not worried about their teenagers getting their hands on a credit card the plastic of choice for college students. But should they have credit cards in the first place?

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.

A college student can be added to your own credit card. The card is issued to them with their own name but you keep track of what purchases are made. Start by setting some ground rules and see where it goes from there. If the student has been able to manage money before acquiring the card, they may be able to resist the temptation of using plastic.

Go over the statements once a month with them. This can be done over the phone if they attend school far away, or in person if they can make it home for a weekend. Keeping in touch and setting up payments adds accountability to the equation. With a credit card, they will need that 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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