<p>My daughter will attend college this fall. What type of credit card should she apply: regular, for student only, add-on to my credit card, her card with my co-signing, or bank debit card? What are the pros and cons of each type? Please share your experience and give comments.</p>
<p>Thanks,</p>
<p>There have been other threads on this. One disadvantage I learned of here on cc re the student only secured credit card (if it is the secured type): if student unwittingly goes over the limit, even by $1, she is charged a type of “overdraft” fee for each instance she uses the card (~$29). Picture a female at the mall missing her limit by a minor amount and buying a blouse in one store, purse in another, shoes in another and getting hit $29 for each instance. </p>
<p>We have had S as an add-on to our card since he was about 16. He is very responsible, never used it as a young teen without approval/reimbursing us as appropriate. This actually has established a very good credit score for him. We have kept this arrangement while he is at college (it was just simple to keep it), as he is a very infrequent user and only for items we planned to cover. He pays cash for other items. I think it would be inconvenient to have the student as an add-on, though, if she is using the card for items she is going to pay for herself. Logistical headache of sorting out bill, billing her, etc. Having her own card would also start her on good bill-paying routines.</p>
<p>I also think that typical student checking accounts nowadays come with a combined ATM/debit card, so she may have that option more or less automatically.</p>
<p>I would not encourage a card with your co-signing. Co-signing should only be necessary if someone has credit problems and that is just the person you don’t want to co-sign for. An irresponsible person (I’m sure this would not be your D, but just as a general warning) could run up extensive bills - without your knowledge; as co-signer you don’t see the usage or bills - and then you are responsible. With her as an add-on to your account (if she can’t get a card on her own), you see just what is going on and can cancel her if need be.</p>
<p>Through high school our kids had cards as signers on our accounts for use in emergencies or with prior approval. Since they never abused that priviledge, when they went to college they got their own cards tied to their checking accounts. I did go on as an authorized user (not cosigner) so that I could pull up their accounts online, and trouble shoot if they needed me to if there was ever any issues. This has worked fine for us and helped them to establish a credit history. My kids happen to have MBNA cards which is what their bank issued–come with worldpoints where you can either get cash back or use points towards airline tickets, etc.</p>
<p>My kids have both a debit card tied to their bank account and a conventional credit card, from Bank of America, which offers a zero-cost (if paid monthly) student credit card. The credit card is new, but having discovered that many apartment rental people check a credit rating, it seemed like a good idea for them to have a credit rating, which requires a credit card in their own names.</p>
<p>maybe a pre-pay credit card?</p>
<p>D has same set up as dmd77’s kids and it works fine. While D takes her statements off the web, the paper statements are mailed to the house–we give them a cursory glance to make sure there is no trouble brewing. So far, so good…</p>
<p>I will second what dmd said. I never had a credit card throughout college because my parents discouraged it. I was thankful to graduate without debt, but I also didn’t have a credit score. I had trouble getting an apartment and even getting a credit card. Any number of companies would give me a card when I was a student but no one would approve me based on an application alone once I graduated and had a full time job. I finally had to tell a credit card company my situation (recent college graduate, employed full time, no debt, etc.) and they made a note of it on my application. That’s the company that finally gave me my first card. I never knew it would be so hard when they throw offers at you as a student!! The summary of this rambling is to get some sort of card to begin building a credit history!!</p>
<p>Both my children have student checking with an ATM/Visa debit card. At the beginning of each semester I give them a lump sum book allowance. They get a monthly allowance that pays for all their incidentals and is generous enough for clothing upkeep and replacement. Neither has a separate credit card. They must live on their allowance.<br>
I do this to teach my children fiscal responsibility. I am not the deep pockets to bail them out of their capricious purchases.
Pre-paid credit cards like VISA BUXX might have set up fees and monthly service fees. I don’t think they are a good option.
Teach2005 also led into a good point – our insurance (USAA) which is part of larger financial group once tried to get me to get a credit card for my son (the older child). The advice from USAA – eventually you will want to get your child a “real” credit card so he or she will begin to get his or her own credit history. He still doesn’t have one. He is finishing his junior year. I am going to try to get one during his senior year so he will have a credit history as he heads for his first job.</p>
<p>For those wanting to see their kids establish a credit history:</p>
<p>A credit card account of their own is an obvious option.</p>
<p>Another option is having the student as an add-on to your own account, with a card in their own name, but not a separate account. I read this here on cc and didn’t believe it myself, until I looked up my own son’s credit history. He was under 18, had never had credit in his own name, but did have a credit card with his name on it on our account. He had a great credit score, based just on that! So it is a valid option for building credit history.</p>
<p>jmmom: That’s interesting. Our kids have cards with their names on them and it is an account we don’t use anymore. So it is obvious if they charge something. The rules are clear – those cards are for EMERGENCIES and with permission ONLY. (They are trustworthy though.) I never thought they might be accumulating a credit history!</p>
<p>I figure they can get their own cards and use them on whatever they want when they actually have some income to pay the bills. ;)</p>
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<p>A similar scenario happened to the S of a good friend. He unknowingly went over his limit with a bunch of little purchases – Starbucks, fast food, etc. and got hit with a $30 charge for each time he charged ($150!!! — which he didn’t have). When his parents contacted the bank and asked them to decline purchases in the future once he hits his limit – they refused to – they said that they won’t decline purchases because it “embarrasses” their customers (Obviously they would decline at some point). </p>
<p>“Caring” about their customers may be a concern, but the real deal is that they like getting those penalty dollars!!</p>
<p>Hmm, my kids have had a joint account with me since they were 13–7 years!–and they had zero credit history when I checked it. Perhaps how it’s reported varies from bank to bank.</p>
<p>Our son has been a named user on our credit card since he began driving. This is good for emergencies and gas. Suze Orman said it also helps students establish a credit rating too.</p>
<p>For everyday use, our son has a debit card tied to his college checking account. There is an ATM in the student union which makes it very handy.</p>