<p>Right…and snarky comments shows a true understanding of how things work in the real world. Responsible parents teaching their children how to be responsible adults and manage money properly somehow shows poor “values”?</p>
<p>If you think your child can manage on their own in the real world without a solid credit rating then more power to you. Establishing a credit rating doesn’t mean incurring debt. We also pay off any credit card purchases every month and have taught our daughter to do the same…and last time I looked there was no chimera in my back yard.</p>
<p>annasdad: are you suggesting that kids never get a credit card? How do you manage without one? How do you buy things online? How do you rent a car or get a hotel room? If you can manage to get through life using cash, more power to you. But I would prefer that they learn to use a credit card (I’m NOT saying use credit, just the card) while I can still teach them. They need to know that bills come once a month and need to be paid. They need to understand what happens if the payment is late and what the total cost would be if they actually paid interest on it. I don’t think waiting until they have a full time job is the best time. Besides, mine had jobs and their own money in high school. They need to understand that if they charge a bunch of fast food meals, it hurts to pay for it a month later. These lessons should be learned while the amounts are small.</p>
<p>D1’s college didn’t guarantee housing after freshman year. She lived off campus after sophmore year, so she was able to learn to pay for utilities every month with the money we’ve given her.</p>
<p>There is no one way of teaching kids how to be responsible and managing their money. I am just offering my view ,and our experience with D1 in her ability to get an apartment/credit card after graduation. For first time freshman parents, maybe it is that critical to get a credit card in college (in our experience).</p>
<p>My wife and I cut up our credit cards 11 years ago. It took us three more years to get out of debt to the credit card companies. We haven’t had a car payment since 2003; we pay cash for beaters. The only debt we have is the mortgage we took out when we bought our house in 1997, the payments on which are about 15% of after-tax income. The result? Even though we’re people of limited means, we will be able to pay for any in-state school my kids can get into without debt (theirs or ours), or for many of the more-generous private schools. Why? Because without debt, we can really afford to pay our EFC, and then some. </p>
<p>As an added benefit, D17, seeing how we live and how some of her friends’ families struggle with debt, has declared she is never going to borrow money for anything.</p>
<p>My credit union offers a low limit credit card to college students and we probably go that route, not to establish credit history but for her to use as emergency.</p>
<p>We travel extensively and have encountered and witnessed plenty of flight delays, cancellations, unexpected overnight stays in layover cities, etc. Not all airlines are accommodating and sometimes it’s easier to rebook your flights and complain later. My D attends college cross country and there is no direct flight from where we live and we hear plenty of horror stories of winter traveling from friends with college age kids.</p>
<p>I guess I will feel better if she has a CC with her just in case. How do other parents deal with potential travel hiccups?</p>
<p>You may want to double check on the “low credit line” concept. When my son got his card, he thought it would be safer to get a low credit line, since if the card were stolen, his financial vulnerability would be low. Then he had a month when a lot of moving expenses, etc. put him over the credit limit without him realizing it. Not only did the card not notify him, they charged him a huge fee for the privilege of going over his own set limit. He was furious - there was no benefit at all from a safety perspective, and all it did was cost him and give more money to the bank. I don’t know if all cards are like this, but you may want to verify what the credit limit from your card does and does not do.</p>
<p>Before the new laws in place restricting credit cards to 21+ years of age, I received my first credit card from Amex and the credit limit was ridiculously high – Far too high for an 18 year old. Granted, I had a credit card under my parents’ account during high school for emergencies.</p>
<p>I then applied for a Discover card as a student applicant and received a lower credit limit than I was given for my Amex. I carry this card in my wallet while away at school and leave my American Express at home for safe keeping. </p>
<p>My dad taught me how to use Quick Books and Peachtree to look after my checking account and to keep spending in check while I was still in high school. This is definitely something I would recommend all students thoroughly learn – how to balance a budget for themselves and stick to it by knowing how to look after it. </p>
<p>My dad had me apply for these cards, so I would have a high credit rating of my own and would have the ability to take out student loans, rent an apartment, have the credit history for a mortgage in the future, etc. and I personally am thankful that I have had the ability to acquire a good credit history at such a young age (For reference, my credit score is above that required for a mortgage by most private lenders and I am only 22 and have only had two credit cards and utilities in my name for a prior college apartment).</p>
<p>My husband, a financial planner, strongly recommended that our son get a credit card his junior year of college, both to establish credit and to use for a semester abroad. He has known since birth that his parents use credit cards almost exclusively, and always pay off the monthly balances. He also knows that his plane tickets to and from school were paid for using points from those credit cards. He chose to get an Amazon.com card offering a very low rate at the time that allowed him to accumulate points toward Amazon credit which he used to buy Christmas presents for his family. He has never NOT paid off his monthly balance, and considers it–now employed and post-grad–a tool in his toolbox. The credit he established helped a great deal in securing his first apartment.</p>
<p>I’m with SJTH. Both S1 and S2 have had credit cards in their own name since the first year of college. Both were set up to be paid in full automatically from their checking accounts. We taught them to use it only as a method of payment, not as a type of loan. Both have great credit which has already served them well in getting renters insurance and in renting an apartment, even tho’ one is still an undergrad and one is in grad school without any cosigning. Sure, if you have a regular good job when you graduate, you’ll be able to rent fairly easily and establish credit, but if you go off the beaten path, or to grad school, it’s a lot harder to set yourself up.</p>
<p>Our kids both had LOW limit credit cards through B of A…that are NO LONGER available. The limit was $300. These were in the kids’ names only. BUT both of our kids worked in college about 10 hours a week. They knew we would NOT bail them out if they overused their credit cards. At the end of the year, they showed me their end of year statements…no interest paid at all…meaning they did pay the balance at the end of the month.</p>
<p>I would NOT have my kids on my credit cards. Sorry…if they can’t have their OWN cards in their OWN names, they shouldn’t have a credit card. And to have their own cards, they would now need to show income.</p>
<p>The credit card industry took a beating…and those college student credit card offers…student only…are not easily available any longer.</p>
<p>We DID have our kids have bank accounts where we could easily deposit money if they needed if for some “emergency”. That worked for us.</p>
<p>annasdad…Why do you automatically equate having a credit card with being in debt? As I said, when you responsibly manage a credit card you get the best of your world and ours. You don’t purchase anything with the credit card that you can’t afford to buy with cash, yet you establish a credit rating for purchasing large ticket items that very few people could pay cash outright for. If you choose to drive “beater” cars that you pay cash for…wonderful. If you want to save up enough cash to buy a house outright…good luck to you and to your kids. Having a credit card and using it wisely does not generate debt unless you allow it to. Don’t automatically assume everyone else is irresponsible or that they’d allow their kids to be.</p>
<p>annasdad- just because you struggled to manage credit doesn’t mean others can’t do it properly. I haven’t paid one penny in credit card interest in over 15 years.</p>
<p>Do you know your children/students? If you know them well enough, then make the decision based on that knowledge. Every parent/child’s situation is different.</p>
<p>BUT, all students/parents do need to consider ways to establish credit. If for no other reason, than possible car buying or for that matter, home ownership! For those of you against credit cards, do you think it is important to establish credit/rating? How do you propose that students do that? Maybe a credit rating is not important or necessary(I am not against the cash only mentality!)…but, in this economy, do you think that your students are going to be able to save enough money to pay cash for a house…which will probably be the single most expensive purchase anyone will ever make? </p>
<p>Debit cards…that is another animal! Spouse just had a client whose debit numbers were stolen and accts cleaned out. Our child/family only use the debit card very minimally and only at the banking institution to which we belong.</p>
<p>We’ve sent both kids off to college with a low limit credit card–too bad the BofA student card is no longer available…that’s the one that works for us. The kids were instructed to use the card at least a couple times a month and pay the monthly bill IMMEDIATELY upon receipt. It is a good habit to develop and it helps them develop a credit history.</p>
<p>I see these credit cards as a learner’s permit–kids learning a skill while parents are watching and guiding.</p>
<p>Oldest D was able to buy a car right soon after graduation at a very attractive interest rate.</p>
<p>I knew my son was frugal, he used his Citi card with a 500.00 limit 4 years ago, pretty well. He almost missed a payment and signed up for auto-debit online for minimum owed and he would pay more another time.
He gets all kinds of offers now, but still sticks with the same one, hopefully when he makes his first larger purchase, it will help.</p>
<p>Hayden - thanks for the heads up on risks with low limit. I’ll check into the fees.</p>
<p>Notre Dame AL - I wonder about the risk of debit cards also. Isn’t there less protection with debit card than credit card? Recently, our CC# was stolen and it was a hassle disputing and canceling the card, but the charge was reversed quickly. I would not want my bank account to be exposed that way, yikes!</p>
<p>When we travel, car rentals, hotel reservations all ask for CC and I don’t remember if there is an option for debit card. Just curious…</p>
<p>“Some of the nation’s largest and most elite universities stand to gain millions of dollars from selling the names and addresses of students and alumni to credit card companies while granting the companies special access to school events”</p>
<p>“Schools can receive royalty payments based on the number of students opening accounts and the amount they spend, the contracts show. Most of the schools are entitled to earn more whenever a student carries a balance from year to year.”</p>
<p>“‘Our objective in serving the student market is to create the foundation for a long-term banking relationship,’ Bank of America spokeswoman Betty Riess said in an e-mail" [no doubt for altruistic purposes]</p>
<p>“College seniors graduated in 2008 with average credit card debt of more than $4,100, up from $2,900 four years earlier, according to data compiled by student lending company Sallie Mae. On their own for the first time, young credit card users can quickly fall behind on payments.”</p>