Careful Consideration Required For A Student's First Credit Card
Sheryl Fellers, Dawson County Extension Service
It's obvious to everyone that college takes money for books, food, gas, clothes and more. The expenses pile up, but it is important that a student knows that his or her credit card isn't without a limit.
Students have enough going on that they don't need the added stress of major debt. But at this age, students strive for independence and that includes credit cards. There are several options that families can choose when deciding on a card.
Students have enough going on that they don't need the added stress of major debt. But at this age, students strive for independence and that includes credit cards. There are several options that families can choose when deciding on a card.
-- Traditional credit cards are available for many students between the age of 18 and 21. Young adults with these cards will receive statements at their away from home addresses. Since they are adults there is little to no oversight of what the student is spending. Since there is no co-signer, the student will be held responsible for paying off the card and for avoiding late fees and interest charges.
-- The other option with a traditional credit card is to have a parent co-sign. This will alleviate some of the concerns a company will have with issuing a student a card. However, the bills still go to the student. Parents may not be able to monitor the use but they'll be held liable if their child doesn't pay off the card or make any payments.
-- Student cards are the same as traditional credit cards but carry a lower spending limit. The student will assume all the risk, but the low limit makes it far easier to manage.
-- Some cards allow a deposit to be carried that is equal to the limit of spending. These may also carry high interest rates.
-- One other option is a credit card under another adult's name but with a student as an approved user. This allows the student to use the card without having to worry about paying off all of the bills. The adult under which the card is listed will be mailed the bill.
-- There are other cards available like debit cards or smart cards. These are set up by establishing an account that holds money. The card is used like a credit card but instead of creating a tab with a bill to pay, the amount charged is simply withdrawn from the account.
Regardless of what card is chosen it is important that the family talks about how the card should be used. Parents should establish the difference between what someone may want and what someone may need and define what constitutes as an emergency.
Also, try to convince students to only use one card as this will make the payments and spending easier to track. And finally, express the importance of paying bills in full and on time. Interest rates and late fees can add substantial amounts of money to the debt owed.
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