9 Year Mortgage on Teaching Your Children to Use Credit Cards Wisely

9 Year Mortgage believes that one of the bigger challenges for parents of college students is teaching them how to handle money. A checking account is a necessity, as is some kind of budget for books, supplies and living expenses. Then there is the big one…credit. So how do you go about getting a credit card for a college student and what are your best options, so that they don’t rack up a ton of debt? Read on and 9 Year Mortgage will give you some suggestions.

9 Year Mortgage on Children and Credit Cards

9 Year Mortgage says the Credit Card Act of 2009 sought to temper aggressive marketing of credit cards to college students by restricting campus promotions and requiring students younger than 21 to have a co-signer, unless they have enough income to get their own card. 9 Year Mortgage noticed that cardratings.com, a card-comparison website, discourages parents from co-signing, because they will still be responsible for the debt.  Generally, the only way to get off the card is to cancel it. Still, college students need to build a credit record so that they can rent an apartment, get good car-insurance rates or sign a cellphone contract, and in some cases get a job. 9 Year Mortgage believes that if your child is more than an hour away from home, he or she should have access to enough cash or credit to handle an emergency, and at least enough to buy a plane ticket home or repair a car while on the road.

9 Year Mortgage thinks that parents and students have a bunch of options. Here they are, with their pros and cons:

Share a parents credit card.

9 Year Mortgage says with one quick call to your credit card issuer, you can make your college student an authorized user on your card, with all the same benefits you have. The credit card company American Express allows parents to set a specific credit limit for an additional member, which can be changed as needed. 9 Year Mortgage suggests that if you give your child access to your credit card, you will need to set ground rules first, like what expenses the card should be used for and whether they need to get your permission before they charge something.

The Pros:

9 Year Mortgage believes that sharing your credit card allows your child to start building a credit record, especially since your good credit behavior will be shared with other users on the card. If your child takes advantage of your trust and generosity, you can cut off the credit card with one quick phone call.

The Cons:

9 Year Mortgage says as parents, you will still be paying the bill, not matter what is spent. Also your child does not get any practice actually handling credit or learning to pay bills on time.

Get a student credit card.

9 Year Mortgage says that about 40% of college students have a credit card in their own name, that is up from 36% last year. However the number is down from 57% in 2001, which people believe is attributed primarily to an increase in debit-card use. Debit cards don’t help establish any sort of credit record. 9 Year Mortgage observed that some people worry that students will be tempted to run up debt. According to Student Monitor, only 36% of students carry a balance from month to month, still the average balance this year rose 35%to 69%, from 2010. 9 Year Mortgage says that student cards usually have a higher interest rate and the credit limit is typically lower, then the experience credit users. Also students under 21 may not need more than a couple thousand dollars a year in income to qualify for a credit card.

Pros:

9 Year Mortgage thinks that student credit cards gives  your child financial flexibility and allows them to learn about paying bills on time and managing credit while the financial stake are small. Also they will be building their own credit record.

Cons:

9 Year Mortgage says that students could run up large debts they cannot afford to pay or they may fail to pay on time, which gets them late fees and by doing this they hurt their credit record.

Have them use a prepaid card.

9 Year Mortgage believes that in most cases, students will be better off with a debit card tied to a checking account, than with a prepaid card, which may charge a monthly fee and fees for using an ATM and loading money. In spite of this however, many colleges are now allowing students to put cash on their students IDs, and may have ID cards tied to local banks, essentially their ID card can function like a debit card. But you still need to pay attention to fees that may be assessed for adding or withdrawing cash.

Pros:

9 Year Mortgage thinks that the biggest benefit to this is that parents have most of the control over how much money is available, and your child cannot spend more than they have.

Cons:

By doing this, you give up the flexibility to deal with some emergencies. Plus 9 Year Mortgage says students don’t build a credit record, pay bills or learn to manage credit.

Ending it With 9 Year Mortgage

So before you hand over a credit card to your child make sure you have discussed which option works best for you. If you are afraid or worried that your child will abuse the privileges of a credit card perhaps go with one where you can put in a certain amount of money or one where you can cancel the card whenever you feel like you need to. 9 Year Mortgage suggests discussing with your child about the rewards offered with credit cards and make sure they understand that they shouldn’t just go and charge things so that they can get the rewards. 9 Year Mortgage thinks that the decision is truly up to you and all of the options discussed have their benefits.

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