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- Include credit card talk in college preparations
If there’s a teenager in your life, you want him or her to use credit cards responsibly once he or she gets to college. LSU AgCenter family economist Dr. Jeanette Tucker offers three words of advice: “Talk it out.”
The family economist says, “All too often, the use of credit cards while away at school is an area that doesn’t get much attention when it comes to preparing for college.” She explains that, typically, parents and their students spend more time looking for the right computer or dorm furnishings, even though a college student’s use of credit cards will have a much greater impact on his or her future.
“One reason why credit card use often gets lost in the pre-college shuffle is because parents and other adults shy away from the topic,” Tucker says. A recent poll by CreditCards.com, for example, found that Americans are more reluctant to talk about their credit card debt with someone they just met than their religious views, weight or salary.
Tucker recommends, however, that parents sit down with their college-bound students, and:
– Discuss the responsibilities that come with being a card user. Make sure your son or daughter understands the consequences of using credit unwisely.
– Work together to select a card option. Options may include adding the student as an authorized user to your card account, co-signing a card in the student’s name or opening a separate account for the student. A parent who co-signs is legally responsible if the account becomes delinquent. With an individual card, your son or daughter has sole responsibility for the payments.
– Comparison shop. Students getting their own card should look at offers from at least three
issuers and read and compare all disclosures and documentation before applying. Emphasize the importance of choosing a card based on its terms, not its giveaway item.
– Agree on the card’s use. Decide whether the card will be used for routine school purchases, such as textbooks and supplies, or for emergencies only. Define emergency. Health issues and car trouble are readily recognized as an emergency need – food, fun, friends and fashion are most likely to be wants.
– Set a monthly spending limit. This amount should be less than the credit limit provided by the card issuer.
Pay bills on time. Encourage students to pay bills on time to build a healthy credit score and to avoid paying hefty late fees.
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Editor: Mark Claesgens