Student Credit Cards
It is becoming increasingly common for teens and college students to have credit cards. Credit card companies have developed major marketing budgets targeting students.
They are handing out cards to students that have zero credit history and zero income! There’s always the parents waiting to bail out their kids if they run up a huge balance.
Hopefully by the time your student gets a credit card, they will have sound financial values. I put together a page with tips to teach children about money if yours are still quite young.
Tips to help students become comfortable managing credit:
- Before credit, learn the basics with cash. Open a checking account for your student. Basic skills of writing a check, balancing a checkbook and managing their money with a checking account is a much safer start because they are using cash, not debt!
- Open a secured credit card first. A student credit card that is secured requires a deposit, such as $500 in the account. The card can be charged up to that amount and no higher. The balance has to be paid down to continue using the card. Over time, the credit card company will add additional credit, sometimes without asking. This is a great starter credit card for your student.
- Talk to your kids about the differences between cash and credit. Explain the dangers of racking up high credit balances and the interest costs to carry that balance.
- Establish an understanding that a card should only be used as a last resort, emergencies or times when a credit card is required.
A credit card for students helps build credit
Student credit cards are a great way to help create a credit history. If your son or daughter prudently uses their credit card, they are getting an early start establishing their credit worthiness. When they are finally on their own, they are already one step ahead when it comes to buying a car, renting an apartment or buying a house.
Apply for a student credit card
Chase has a great program for student credit cards. They are reputable, have reasonable rates and great benefit options. Above all else, remember to monitor your student’s spending and talk openly about their finances so you don’t have just student loans to pay!