Financial lessons taught by parents while they still have some influence in their child's life is a high priority. In fact, if a parent does not take the steps to teach their children good financial management, they are not being responsible parents. Having a credit card in their wallet will happen sooner or later. The society we live in today demands that piece of plastic. Parents can give their children a huge advantage in life by getting them a credit card.
Parents can take a conservative approach or an aggressive approach to this issue. A conservative approach would have your student apply for a secured card. These cards work by making a deposit with the issuer. The amount of the deposit is the limit of the credit card. It is no risk for the issuer and gives you control of maximum debt. Start out with $ 200 to $ 500. Tell your student what he can and cannot charge on the card. If you have not already distinguished the difference between needs and wants, now is the time to start explaining. It would even be advisable to start this program in high school. A college student is deluged with credit card offers on campus. Do not let them make the mistake of applying for a card and learning how debt can get you into big trouble.
Your student actually spends a lot of money. Have them use the card to buy their clothing, shoes and other necessary expenditures. This will allow them to establish credit as well as learn that bills are always paid at the end of the month.
Taking the aggressive approach carries more risk. Assess your student's level of responsibility. Since you have lived with them for 18 years you will have an idea of their ability to make good decisions. This approach should only be taken when communication is open and honest and all parties are on the same page.
Apply for a standard card with a higher credit limit. You will probably have to co-sign and there is the risk. All of the previously mentioned guidelines must be adhered to. Using this card for needs only can greatly enhance their credit and credit line. Including all the college expenses, tuition, dorm, books, etc., the average student is well in excess of $ 20,000 in a state school and $ 40,000 in a private school. Put all of these charges on a credit card to enhance credit worthiness. Most of these bills will be paid for anyway so use your credit card.
Another consideration is to get a reward card or cash back card. This will benefit both you and your student. It is also another opportunity to teach financial lessons.
It takes time and discipline to effectively administer these lessons. The benefits will be paid back for a lifetime. Shop and compare offers that best fit you and your student