Opinions wanted: how should parent handle credit card charges?

chicabuena · September 24, 2014, 1:38am

Let me preface by saying I am livid about this, although I did not tell my husband, I just ended the discussion with a non-committal smile, I have been fuming for a couple of days now and I am not feeling any better.

Our daughter is 21 and a senior at a highly selective LAC. From the very start of her freshman year my husband did not want to give our daughter cash (deposit money into her checking account) and have her pay her own bills. Nor did he want to give her a credit card. But he realized daughter needed a way to pay for things–rent, food, gas, etc–so he gave her a credit card attached to our account. He never gave her an amount to spend or not spend, and no access to the statement, so DD had no idea how much she was spending. Nevertheless, she has been pretty reasonable, IMHO. About $600-$800 month for gas, school supplies & textbooks, groceries (no meal plan), medicine, doctor visits, parking pass…you get the picture. Yes, there are some visits to Dunkin’ Donuts and 7-11 for coffee, and occasional stops at Whole Foods or a cheap (under $10) restaurant for dinner about once a week. In the meantime, hubby has never asked about where DD’s rent or utilities payments are coming from. (Answer: DD has a partial scholarship, and I supplement with profits from selling yard sale finds on eBay) We pay her auto insurance and a cheap cell phone plan $24- month.

Fast forward 3 years. I suggested to hubby it is about time DD learned to handle her finances for herself, and have a set amount of cash in her checking account every month, to cover rent, utilities, and groceries. She needs to learn how to budget, despite the fact that she is a pretty frugal young woman and shops at the Goodwill for clothes, etc. I also said DD still needs to have the credit card for those expenses not within her control, like the doctor’s visits, medication, textbooks and supplies, and gas. Those are fairly cut-and-dried costs. There is no increase in our cash outlay, it’s just a more reasonable way of doing things.

Hubby reluctantly agreed with me about depositing the cash. But regarding the credit card use, he now wants DD to call for “pre-authorization” every time she is going to make a purchase. This means getting gas, buying paper for her printer, getting vitamins or tampons, etc. Regardless of the time, he wants a call.

I believe he is being unreasonable. I have told him so. He believes DD needs some “accountability” but I feel this is not the way to do it, as it doesn’t teach her anything. Especially since she is not a spendthrift nor does she eat Doritos and ramen noodles all week just to splurge on tattoos or a keg for a party.

Not only that, my husband doesn’t keep the cell phone in the house, nor does he answer the home telephone. He is generally in bed by 9 pm. So I would be the one to “authorize” her purchases and I truly balk at this nonsense. She does not have a steady job this semester (she was abroad for a year and returned in the middle of summer) but she does have savings from her jobs in the past. And although her jobs were not traditional jobs, i.e. working p/t at McDonalds on weekend nights, she did free-lance work tutoring where she made anywhere from $1500-$2000 per year. This, combined with monetary gifts for holidays, is what she uses to pay for clothes, beauty supplies, etc.

My husband doesn’t want to be the bad guy and tell DD the new rule, but he is a very distant father and is not comfortable with dealing with DD. Yet I cannot do so, because I don’t believe in the new rule.

Any advice?

thumper1 · September 24, 2014, 1:56am

Ok…here is my opinion. When our kid lived off campus, we gave him $800 a month, and that included ALL of his rent, utilities, and food. He had a job to pay for other spending…including books.

I think you have been very generous with your daughter. If she isn’t working, and is spending your money on,y, I agree with having her call to get authorization for credit card purchases. After all, you are putting money into her account. To be frank, she should be able to pay her necessary bills with what you are depositing in her account.the credit card should be reserved for necessary more expensive purchases.

If she needs to call every time she goes to Whole Foods, or Starbucks, perhaps he will realize these are not necessary expenditures, and will learn to budget accordingly.

Our kids had jobs in college. They paid for all discretionary spending, plus books. Honestly, because they were spending money they earned, I never questioned what they bought.

But if they had been using MY credit card…yep, I would have been reading every expenditure, and questioning them too.

I think your husband is right. It’s time for your daughter to be more accountable for YOUR money that she is spending.

coolweather · September 24, 2014, 1:59am

I agree with you that you should deposit cash into her bank account. Besides that, she needs to apply for her own credit card. She needs to build her own credit so that she can rent an appartment, rent a car,… after graduation. Pre-authorization is too much controlling. It seems your D is very responsible with spending and she deserves some trust. She can keep your credit card until she gets her own.
I have senior D too and she just has her own credit card this year.

ailinsh1 · September 24, 2014, 2:01am

My DS is a freshman. He has his own savings-secured credit card (Meaning, he can have whatever credit limit he wants as long as he has enough $ in the bank for them to reserve as collateral against the card. So, for example, before he went to school he asked to have his credit limit increased to $1000; so his available balance in his savings account at the bank was reduced by $1000). At this point we are paying for books, or when he was home, things he’d get for me because I asked him to stop off and pick up stuff, but he pays for anything else that he needs while he is at school with $ he earned over the summer. So, when it is time for him to pay the bill, he sends us a pic of the online statement and tells us how much he needs from us to cover books or anything else we’d agreed to pay for. I transfer that amount from our account to his, and then he pays the full bill from his account. So accountability is monthly, when the bill is due; not every time he wants to purchase something, unless it is something he wants us to pay for that we haven’t previously agreed to.

atomom · September 24, 2014, 2:06am

Don’t fume. I agree with you that, given your D’s habits, and your willingness to let her continue using your card for particular purchases, it doesn’t seem reasonable for her to have to “call for authorization” for every little purchase. Since your H doesn’t seem to be involved, I think you and your D should just agree on what items the card should be used for. If she needs to use it for something else, or if there is a charge above a certain limit, then she should let you know. That way, she will still be “accountable” in your H’s eyes, but not have to report every little thing. If your H asks about it, tell him this is what D is doing.

1214mom · September 24, 2014, 2:10am

My kids each have a credit card. I have access to their savings accounts. They are supposed to use their debit cards for purchases they should be paying for, and the credit card for books, occasional meals out, groceries, etc. They know that I will take money from their bank account for anything I am not willing to pay for. So far, we’ve had no problems. I do pay for SOME non-necessary expenses, but when they use the card, they know they may have to pay. they’ve actually both been quite responsible.

LBowie · September 24, 2014, 2:14am

Can she get a debit card for an account into which you put a monthly deposit and have the credit card only for emergencies? That way she can just use the debit card wherever credit cards are accepted, will draw down the balance each month but won’t have to call for authorization? I agree with you by the way that it does not teach anything to have to ask permission each time. Would your husband be ok with receiving a text saying, “I am buying $40 of gas on the credit card” just so he knows? Would that satisfy him?

donnaleighg · September 24, 2014, 2:23am

It does not sound like your DD has abused the card in the past; why does your husband think she will now? I don’t think pre-authorization is a way to “build an adult”; it seems more like a way to keep her a kid. My daughter has had a credit card linked to mine, and has used it carefully (just books, toiletries, laundry). If your daughter ever did happen to use the card in an inappropriate way, then you have “the talk” and hash it out. Doesn’t sound like that’s going to be necessary.

But really, this is a husband-wife thing, not a thing with your daughter, IMHO.

busdriver11 · September 24, 2014, 2:54am

Pre-authorization is ridiculous, I’m with you on this one. How about this? You keep depositing the money in her account, and when she uses the credit card, you just transfer the money out of her account to yours. Or give her less. For example, my kid will text me and say, “I put $50 on the credit card.” So either I transfer the money from his account, or give him less the next month. If she’s putting lots of transactions on the card, you can reconcile at the end of the month. The way credit card statements are now, it’s easy to get a total of what she spent. If you trust her, and it doesn’t seem like she’s given you reason not to, you can work this easily.

He’s trying to make what is very simple much too complicated.

chicabuena · September 24, 2014, 4:44am

OP here, needs to clarify:

DD has her own checking account with debit/ATM card. This is where I put money for rent, utilities, and food, and she is supposed to draw from this account for those things (which she does). In addition, she deposits her own earnings in this account and she draws for her own personal items (cosmetics, clothes, a magazine, etc).

But my husband does not want to put a lot of cash into her ^^ checking account to also cover gas, doctor bills, medicine, and books, which could really add up. When I asked him how he wants her to pay for those things (obviously she doesn’t have the money) he said he didn’t have an answer…he doesn’t want to give her the cash, nor does he want her to use a charge card. He said he would prefer that she get a “Secured” charge card (the kind for people with no or bad credit, and low credit limits) and then charge her books, doctor, medication, and gas on that card. and then ask for reimbursement by submitting a statement to him once a month.

I countered that with the fact that her credit limit might be only $300 or $400, and if she buys $200 of books and the doctor’s bill is $160, then her medication is $50, and then she needs to buy a new printer (which happened recently), she may not be able to charge all those items. Nor would she have room on her charge card for emergencies when we are out of the country (we travel abroad frequently).

I am trying to get to the bottom of this. I know my husband does NOT like to see Whole Foods on a charge statement, nor any place that sells coffee, like Dunkin-Donuts or 7-11. He wants to see groceries purchased at WalMart and BigLots. But MY point is that we should not be micro-managing where DD shops–it is up to DD to determine from us, what her priorities are and how to allocate her limited funds. She will just have to be creative in her meal planning . , is my way of thinking.

This is bringing up a memory from the past, when hubby and I first married, I didn’t have much money as I had given up a job to relocate into the community where he had a business. It was very difficult because I was 30 and had been single and self-supporting up until then. So when I told my new husband m I needed money! he asked for an itemized list of what my weekly and monthly expenses would be. Which meant I had to write down such things as personal products (tampons) , hair dye, shave cream, gas money, clothing allowance–I wrote the list, but I was furious. …So now as I write this I see this issue is not new, it has merely re-surfaced in another way…And yes, it is between hubby and wife. Thanks.

busdriver11 · September 24, 2014, 4:52am

Do you think he is just being cheap, or does he have a valid reason to be concerned about finances? Are job situations and finances secure, or is he worried now for some reason? Just seems to be odd to now be concerned about this, in her senior year, unless there is a particular reason. Maybe you should just let things stay as they were, it’s not that much time left before she graduates. That is, if this is a really big deal to him.

soozievt · September 24, 2014, 5:02am

When my kids were in college, we deposited their allowance monthly into their checking accounts, plus they had some of their own earnings. This sounds similar to what you do with your daughter. Then, they had a copy of our credit card in case of emergencies, but also for certain things we authorized (they were not to use if for anything unauthorized). But these were sorta “pre-authorized.” For example, you have said you want her to use the credit card for books, gas, doctor appointments, and medicine (which are not necessarily regular monthly expenses). Our kids used it for those things too. But what happened is that we “pre-authorized” to use the credit card for books and school supplies or when you pick up medications. These were things we agreed to pay for by credit card. They did not need to call before buying the books, for example. What they did was to drop us our email to say, “charged $189 today on the credit card for books for my courses.” Now, if anything were to come up that was not pre-authorized, sure a call to ask permission to charge it would be necessary, but this was quite infrequent. Can’t you set it up this way? You’ve already said what she could use the card for and so you are authorizing books, medicine, doctor appointments and gas. She doesn’t need to call BEFORE each of those purchases. She could send you a note and record what she had charged, if you wish so that you know about it. She should only have to call to get something authorized if it is not on the pre-authorized list. That should not be too frequent because the cash you put in her checking account was for monthly expenses and the credit card is for these pre-authorized things on a short list.

calmom · September 24, 2014, 5:37am

Your daughter is 21 – she should have her own credit card.

ucbalumnus · September 24, 2014, 6:32am

The micromanaging of her finances makes no sense. But then since you submitted to his micromanaging your finances before, he probably expects you and your daughter to submit to the same micromanaging of her finances.

The obvious sensible way would be for your daughter to get her own credit card (though would advise a credit limit that will keep her from getting too deeply into debt). Any contribution from you to help her with college costs should just be the pre-set amount. Let her manage it and any other money she may have (and see the consequences of whatever decisions she makes).

thumper1 · September 24, 2014, 11:42am

Why does she need to use a credit card…except for emergency purchases…and maybe her doctor?

Just deposit a reasonable amount into her bank account and help her budget using THAT amount. Right now she has a bottomless pit of your money. If you want her to learn to manage money, she needs to learn to manage what she has.

So, my suggestion, figure out what she needed (note…not wants…she can get a job for that), and deposit that amount into her account monthly. After the first month, review her expenses and the deposit amount. You can decrease or increase based on need.

The credit card can be used for her doctor, and prescriptions, and maybe books (if that is OK with you). Agree on what it can be used for. It would be nice if she contacted you to let you know any of those charges will be appearing. I personally do NOT like surprise purchases on my credit card bills…even from my husband.

scholarme · September 24, 2014, 11:55am

Both OP’s approach and her husband’s approach seem to keep the daughter in dependent mode. If you both feel she is mature enough now, tell her how much you are contributing to her monthly and deposit that in her account. If she wants a credit card she should figure out how to get one on her own. Parents should be in advisory &supportive mode at this point, not deciding and controllong mode, just IMO.

neatoburrito · September 24, 2014, 1:13pm

Since you asked for opinions, here’s my 2 cents. Decide what she needs monthly and deposit that into her account and let her take it from there. The credit card should only be used for emergencies. She is old enough and sounds reasonable enough to handle all this on her own. She should also look into getting a credit card in her own name to build credit.

My DD is not in college, but attends a boarding school. She is also very frugal. And even though she doesn’t earn money herself, I feel strongly that she should know exactly how much money she is spending. She has had a checking account with a debit card for a few years. It is a joint account, both our names are on checks and we both have individual debit cards with distinct numbers and our own names on the card. Everything that she needs to purchase, whether it be school fees, testing and application fees (college apps), extras, books, comes out of this account. When I get a bill from her school, I forward it to her and she walks over to the business office and writes them a check. Even though I could pay the bill online, I want her to physically pay the bill because that’s what grown ups have to do. She is seventeen. Your daughter is 21. She should be doing the same.

I don’t think it’s necessary for young people to actually earn money in order to learn the value of it.

It seems as though your daughter has things under her control. I don’t like the idea of giving kids credit cards unless they also write the check when the statement comes in. The first step in financial literacy is appreciating how much it costs to live. In a year, your daughter will be in the real world would probably benefit from knowing exactly how much money she is spending a month. It doesn’t sound like she over spends, but she is also not actually looking at the total every month. I don’t think the fact that her credit card charges are magically paid every month is a good thing, preauthorized or not.

mathmom · September 24, 2014, 1:21pm

My son had his own credit card. He gave us an accounting of things we had agreed to cover (like text books) and reimbursed him. Otherwise he uses his debit card and his own bank account.

walkinghome · September 24, 2014, 1:43pm

It sounds like the three of you have never had a real discussion of how expenses should be done. In our family we agreed to pay for tuition, room and board, books and cell phone. While in college (we have one who is a college senior now), they pay for their own entertainment however they can. As freshman they got their own checking accounts and the current college student was able to get his own credit card from that bank. I also have him as an authorized user for our credit card. He uses that one for pre-authorized expenses but mostly travel home.

I would suggest that your daughter go to the bank where she has a checking account and see if she can get a credit card from them. Forget the secured credit card. Our son has his credit card tied to his checking account and the bill is paid automatically from his checking account. I would suggest just doing that and presenting it to your husband as a fait accompli.

Whenever my husband would say something totally wacko, I always ignored it and did what I wanted.

busdriver11 · September 24, 2014, 2:29pm

You know, she really doesn’t need to have a credit card. If her ATM card has the credit symbol on it, it can be used as a credit card. I started a thread about this very topic, and I never was able to convince my son to get a credit card. He has been living and working in NYC for over a year, and has had zero need for a credit card. I insisted that he keep one of ours in his wallet for emergencies, and he has only used it one time at my request (it was a bigger purchase and I’m trying to get airmiles).

She can just do all her business via the ATM card, manage her own expenses, and only have the credit card for emergencies. It’s really simple. Soozviet also had good ideas. This doesn’t have to be difficult.

Opinions wanted: how should parent handle credit card charges?

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