Applications for credit cards are readily available to college students, so it is a good idea to discuss the financial responsibilities with your student before s/he leaves for college. Whether or not your student will get a credit card is ultimately a personal decision. Factors to be considered or questions to ask before making a decision include:
- Do you understand how to use the credit card?
- Do you understand the details of using a credit card and the terms such as finance charge, late fee, annual percentage rate, over-the-limit fee, and grace period?
- Do you know the implications on your financial future if a credit card is managed poorly (impacts employment possibility, auto insurance, loan costs)?
- What will be your monthly spending limit?
- Will you pay the bill in full each month?
- What are good reasons for using the credit card?
- What features and which specific credit card is the best choice based on how that card will be used?
- Is it a wise idea to have a card issued solely in the student's name, or will you as the parent be the owner and the student an authorized user? Authorized users get the benefit of using a credit card but have no legal responsibility for repaying the bill.
- If you view getting a credit card as a teachable moment, consider assisting the child in getting a credit card in his or her own name several months before leaving home and teach the student how to use it including paying the bill on time. Actually using a credit card at home under your watchful eye gives the student an opportunity to ask questions and parents an opportunity to spot potential problems in managing the credit card.
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