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Teach your college student financial responsibility with a credit card

Credit cards and college students; the answer as to whether to send your child off to college with a credit card may not be so clear cut. Since there are other options that don’t involve late fees and high interest rates, getting a credit card may not be the best option for you and your child. Though, if you feel that your child is either financially responsible or this is a good time to teach them how to use a credit card without going into debt, then keep this advice in mind.


Do open a new account and make your child an authorized user

Opening a new account and making your child an authorized user will still give your student independence, but retain some control on your part to monitor spending and deposits. A debit card can be issued from the account, and a budget set up for spending weekly.

Do be aware that their credit activity can affect your score

Have a conversation with your child to let them know that there are consequences to overspending on a credit card. This is why it is also important that you monitor their activity and make sure they are paying the bill. If they are not paying their bill, it can negatively effect your own credit score.

You shouldn’t simply give them the card and just pay the bill. Make sure they are using the card for agreed expenses and that the card is paid on time. You can do all of the monitoring easily online through the card’s website.

Do encourage them to get a part time job to pay the bill

Having your child get a job will help them learn the value of the money that they are spending, as well as set a good example for financial responsibility for the future. Even if they find a job where they are only getting 20-30 hours a week, they will realize that time is money and that they can’t expect to spend without having to work for it.

Do consider a prepaid card as an alternative

As a general rule, it is good to find alternatives to credit cards that will help your newly independent child learn to manage money and their college lifestyle. By doing so, you will not only teach financial responsibility, but will also lay the groundwork for good money management skills for your child’s future. Options like a debit card or prepaid credit card that can be used the same way as a credit card, but come without the worries of interest or overspending. These types of cards will force your child to stay within their limits, and eliminates the worries of interest, late fees, and a hit to your credit score.


Do not give them a card without teaching them financial responsibility

Make sure your child understands that credit is not free money and there are consequences for not paying your bills. Also, giving them a specific budget each week or month, similar to an income, will help them learn to budget and spend wisely. Be sure to rework the budget with your child each semester based on both of your needs.

Do not give them a card without setting guidelines

If you are planning on paying the bill for your child to help them out while they are in school, be sure to set a monthly limit. If they exceed this limit, make them pay the difference. Tell them what purchases they are allowed to make and which purchase they aren’t allowed to make.

Do not continue to pay the bill if they aren’t within the agreed limit

You need to put your foot down if their spending gets out of control. College is a good time to teach them financial responsibility, and high spending on credit at an early age with no consequences can lead to big debt problems in the future. If your child’s spending truly gets out of control, close the card. If you need to replace the credit card with something else, replace it with a prepaid card so that they cannot go over the limit.

Do not allow them to use your existing credit cards

Do not just give your child your own personal credit card. Set up a new one in their name. This way you can keep the limit low and not mix up your purchases and theirs. Given some of the new laws, you may find it difficult to get a credit card in only your child’s name, and then be required to add your child as an authorized user on another card. If you just make them a user on a current card, the limit will most likely be higher and you may not realize all the purchases they are making because they are jumbled up with yours.

Do not ignore their bills

Open the statements or ask to review the statements with your student. Even if you allow your child to get a credit card under the agreement that they will be taking care of the bill themselves, make sure you either check their online statements or have paper copies delivered to your house to make sure they are paying their cards.

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If you follow this advice, it can serve as the basis of good financial responsibility going forward. Since this is the first time your child will be making financial decisions independent of you, the important lessons they learn are vital for ensuring a debt-free future.

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Leslie H. Tayne, Esq.President

Headquartered in Melville, N.Y. and led by financial attorney Leslie H. Tayne, Esq., The Law Offices of Leslie H. Tayne P.C. is the only New York State practice whose sole concentration is debt resolution and bankruptcy alternatives. Since its e...

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