Credit Card for College Freshman

[newmassdad]

I cannot emphasize enough that you need to read and understand all the terms of any card you want. Yes, there are some great deals out there, but they are not usually the ones heavily recruiting by direct mail. All too often, the so called "free" cards get you in other ways:

- cash advance? Pay 3% and interest starts immediately.
- purchase in Canada, Europe or elsewhere outside the US? Pay an extra 2-3% on top of the Visa/MC 1% exchange fee.
- just received your bill? Look carefully. The due date may only be a week or ten days away. Remember, they can run billing cycles any way they want.
- a day late with the payment? Mail was slow. Too bad. Triple base hit for the card issuer. First your interest rate jumps. Then, they charge you a $35 late payment fee. And...who knows what else is in the contract.

[yulsie]

I also gave S access to a credit card account with a small limit ($3K), instructing him to use it for gas or food if he runs out of cash. He has been admirably prudent about its use, therefore I have no qualms allowing him to keep it. Also recently got his own bank accounts and ATM card - still has not balanced his checkbook (or written any checks).

[wish_it_was_april]

When my kids began doing things without me - like shopping at the mall - I felt it was safer for them to carry a credit card than cash. So S carries a card that is joint with us, but "his" in that it has a very low credit limit (about $800) and he is the only one to charge things on it. Although he has never lost it, if he were to, it would in no way impact on my ability to use "my" cards. And it makes settling up at the end of the month easy. As he gets older, he has used it for gas, doctor appointments, etc. and I know if he should have an emergency - like his (hmm, I mean my) car gets towed, he will always have enough money to do what needs doing.

[seniormom43]

Thanks for all the great info. While I understand the potential risks of students having cards, I am very comfortable with my daughter having one at this point. Being at school in a city, and travelling home by bus it is something that I feel is important so she need not carry a lot of cash, and need not deal with fees associated with the debit card (not to mention the debit cards are not accepted as universally as credit cards).

My frutstration was with the card company advertising the card as a 'credit builder' yet denying her because she had none. despite exeeding the minimum required balance in her bank accounts and minimum income from her on-campus job.

We will look further on-line for other card companies. We really want no fees, and have always made it clear to our kids that when they do get credit cards, that they should pay balances in full each month as we do. The key is to not spend money that you dont have.

[jamimom]

The same thing happened to my son 5 years ago. He was doing some college trips without us and it was a pain to arrange payment of the hotel rooms without his having a credit card and it just made travel a lot easier. We found that some places will not take a joint ATM/debit card even with the MC or Visa seal on it as they can tell it is a debit card. Don't ask me why. Car rental places are particularly bad about this but it does crop up elsewhere as well. We finally just added a card for him on one of joint credit card accounts. Within a year after he was in college, he was deluged with card offers, most of which were ursurus in interest rates, but we manage to get him his own card. This time around with S2, we did not even bother to try to get him his own card, as we knew the drill. Again, he did some college trips and things on his own where a card in his name was useful. I am sure he will be inundated with card offers as well, once he is in school. S1 got a nice deal on his American Express card and a school visa card once he was in college, and I'll be eyeing the same type of offers for S2.

[patsfan]

My son is a freshman and I applied for a card in his name through the CItibank website. The card is for college students with little or no credit history. He was approved with a credit line of $800. He did have a summer job and a checking account.

His instructions were to use the card for emergencies and for school purchases such as books only unless clearned with me in advance. So far it has worked out.

For spending money, he has an account with a bank that has a branch on campus and has a debit card to access his money.

Since I did not want to burden him with worrying about managing the payments at school, I make the monthly payments.

[jmmom]

Good idea, wish_it_was -- I had never thought about the hassle if S loses the card. We may want to get another acct just for his use, even though joint. Thanks for the tip.

[newmassdad]

Another point to consider, in favor of credit cards, is that the legal protections for purchasers who use credit cards are higher. Debit card issuers have announced policies that grant similar protections to debit card users, but there is no force of law behind their statements. Whether there is an enforceable contract right, I will leave to an attorney to decide.

As a result, I've encouraged spouse to use a charge card over a debit card.

[Maize&Blue]

Good point, newmassdad. Hadn't thought about the positives for the kids to be able to dispute charges when warranted (i.e. defective merchandise).

I'm getting OT here, but some of these posts hint of controlling actions by us parents. Handling credit and making $$ decisions are part of the process of separation. I don't know what my children charge on their cards, nor do I want to. I don't see the bills nor pay the bills to save them the trouble. They have such low credit limits that they can't really get into too much trouble before they'd come running to us for help/advice. I'd like them to learn the consequences of being late or carrying a balance, and what to do if lost/stolen. S lost his in London during spring break some years back, and learned a valuable lesson as he dealt with the hassles of trying to contact US credit card company late at night (early AM in London) on a weekend. He also found out that neither H nor I could fix it for him (his card, his name - they wouldn't talk to us). We've all dealt with such circumstances and consequently have developed our various perspectives on credit usage.

[dspringer]

You could always issue an additional card off your account with AMEX. AMEX does report for additional cards, which works well for me as my dad got me a an additional centurion "black card" and now as a HS senior I have the credit of a 50-something executive.

[bettina]

The most appropriate time to start building credit is when you get a job.

[jym626]

If you plan to move into an apartment, even as a college student, you will probably have to put down a deposit to get utilities, etc. If you have a decent credit history, the amount of the deposit might be much less. As long as the credit history you establish is, as someone said earlier, GOOD credit, I don't see any reason not to start early. The longer you have a good credit history, the better credit rating score you will get when you are ready to buy a car, a house, etc. As with savings, the earlier you start, the better result you will get.

[fendergirl]

i got a capitol one credit card when i was 16. i have a pretty nice credit rating now that i'm 22. it helped me out in getting a loan for my car.

[wish_it_was_april]

While I agree with other posters who believe that their kids would be very responsible with credit cards - I too think my S will do fine - smart kids sometimes do thoughtless things and get themselves in trouble. Unbeknownst to his parents, as a freshman in college, the older brother of S's friend signed up for every credit card offer he got. He then used them to party and such, and within a short time he had debts above $8,000. It was a huge mess and it took literally years for him to pay everything back and fix his credit rating. His parents, professionals who thought their smart kid would do just fine, were astonished.

This situation is among the reasons that our HS will be offering an after school session for juniors and seniors on Financial Smarts. It's a little late for our class of kids, but future classes will get more than one session on managing money. We are also hoping to do a session (given by an ER doc/parent) about when to seek medical help, as well as one with an attorney/ parent on what it really means to turn 18.

[fendergirl]

Honestly, I think if you run up 8,000 dollars of stuff on credit cards then you're not smart. Period. I realize people make mistakes and all, but 8000 dollars is so extreme that it can't be a mistake. No offense if any of you guys have done this, but it's just common sense to me.