Quite frankly, there are almost as many winning arguments against getting that credit card for your child in college as there are for getting that card. Let us look at some of them below:
Credit history
- In a matter of years, your child will be done with college and will want to start an independent adult life. To get a loan for a car or an apartment, your child will need a good credit history. One important factor in determining credit history is the length of time that it has been maintained. By allowing your 18 year-old child to get a credit card and ensuring that he or she uses it responsibly, you enable your child to sustain a good credit history for a number of years before requiring a loan.
- Conversely, if your child has a problem with using a credit card responsibly, he or she could very well start trashing his or her credit history and could be facing serious problems later. A credit history that has gone bad at 18 could continue to affect your child at 25.
Emergencies
- As a college student, you cannot expect your child to have a large amount of money at his or her disposal at all times. During emergencies like a car breakdown, credit cards can come in very handy.
- On the other hand, there are other options such as debit cards which carry a Visa or MasterCard logo for such emergencies.
Valuable knowledge and experience
- By the time your child enters the working world, he or she will need to be savvier about credit card offers, loans and banking facilities. The practice and familiarity your child gets (at such a young age) in studying and comparing the terms, rates, incentives, services and solutions of credit cards before selecting one will help prepare him or her for the future.
- Furthermore, gaining experience in using credit cards responsibly is highly valuable. This could be an ideal opportunity to cultivate god spending habits.
- Even if your child makes the mistake of keep balances or making late payments, it is probably not as serious (if you correct it soon enough) and again it provides him or her with a very valuable lesson for life.
Now that we have looked into the three most compelling reasons to allow your child in college to get a credit card, let us look into how you can guide him or her to use it responsibly (that is, if you have decided to get your child one).
- Shop around for the most suitable offer. Involve your child in the process from start to end.
- Teach your child to study all aspects of the credit card such as interest rates and late payment charges in order to make a well-informed decision.
- Explain the importance of reading the fine print and go through the contract together with your child before signing up for any card.
- Ensure that your child is completely aware of interest rates, minimum payments
- Source for a card with low APR so that if your child ever leaves any balance to be paid off, the interest charged will be as little as possible.
- There are cards that offer no annual fees. Go for them. Save yourself and your child that money.
- Get a card that has a low credit limit. A college student need not have a large credit limit and it will avoid any temptation to overspend.
- Ensure that your child makes the payment on time. Missing out on payments is a possibility as college students lead very busy lives. Late charges can easily jack up the bills quite a bit.
- Forbid your child to make any cash advances. The interest charge on them can be as high as 20%.
- Encourage your child to use credit cards on for emergency purposes. Getting into the habit of using the card casually may eventually lead him or her to carry balances on the account. Do not let your child become comfortable with the idea of having debts.
- You may consider going through the credit card statements with your child and advice appropriately.
- Discourage your child from having more than one credit card. It is not necessary for a college student to carry more than one.
Ultimately, the decision lies in your hand. You know your child best and you know if he or she is ready for that plastic. Even if you decide that your child is ready, it is important that you provide him or her with proper guidance on using it.
