If you have been following the news, you probably are probably worrying right now about your credit card and how it's going to or is affecting your finances. If you are like the majority of American consumers, then you are probably thinking that credit cards are twice as dangerous as they are convenient. So why get your college kids credit cards?
College students and credit cards don't mix very well, if recent survey figures from Sallie Mae are to be believed. According to the survey, more and more college students are going into deep debt and many are graduating with large debts to their name, making starting a career even more difficult.
However, like many things, credit cards are bad if you don't use them right. While an overused and abused credit card inevitably spells financial doom, a properly managed one can help your credit score and can be very useful in times of emergencies. Your college student can get a lot of benefits from a credit card, just be sure to teach them how to use it well.
So why get a credit card right now? Why not when the “cardholder-friendly” credit card bill comes out? For one thing, if your college students get their credit cards now, it will be easier for them to do so than nine months down the road. When the credit card bill comes into effect, getting a credit card will be much more difficult for them. At the start of the school year, credit companies are going to be pushing their credit cards to college students. Make sure that you inform your kids on how to choose a right credit card and tell them to not be deceived by perks and bonuses that many credit card companies will offer along with their credit card applications.
If you are worrying that your college kids are going to go overboard with their credit card use, you can be assured by the low credit limit of credit cards. Most credit cards for college students have a credit limit of $500. You should encourage your kids to avoid overdraft protection. Overdraft fees can cost a lot. Also, colleges are already being encouraged to include financial literacy as part of their program for new enrollees. This will be a big help in educating your college students on how to use their credit cards responsibly.
Financial responsibility is one of the major requirements for success. There is no better and more effective way to teach this to your kids than by letting them try out managing credit cards while they are still in college.