Going to college entails a lot of responsibilities for your child. This is the time when they will start to yearn for their independence. They will live on their own and they will have to find their way to survive despite being far from you. They have to rely on their own resources for minor and sometimes even major needs. This is the trial period wherein they will test how ready they are to be independent of their parents.
As difficult as it may be for you to let them go, it is important that you equip them with the right tools that will help them cope with everything that they need while away from you. One of the things that they will need is constant financial support. We all know how expensive college can get. While other children get part time jobs, the main bulk of their financial needs will be provided by you. But despite that dependence, you need to help them learn the right financial management skills that will keep them from going wild during their short stint on campus.
Is it a good idea to give your college student a credit card?
One of the toughest decisions is giving your college student a credit card. We all know how dangerous it is for anyone to possess cards. If you got yourself in debt and you had been paying your dues, how susceptible do you think your child will be to the same fate? If you who had been a credit holder for quite some time cannot protect yourself from credit card debt, what more a first timer?
However, you know that you need to give your child a credit card because it will help them through college. Here are the benefits of giving them this card.
Gives them access to emergency funds.
Allows them to build up their credit report.
Provides them with a venue to practice proper financial management.
Introduces them to the concept of debt and how to pay it off properly.
Keeps them from losing cash during transactions.
Despite all of these benefits, you need to keep in mind that some of these are not common knowledge. You need to orient your child about it so they understand the concepts of debt, payments and financial management. Failure to do so can lead to your child being buried in too much credit card obligations.
There are many stories of new graduates who found themselves under so much debt – that is because of both student loans and credit cards. You need to make sure that your child will not fall into the same statistic. We all know how ugly credit card debt can get so it is best to equip your child with the right knowledge about it.
Credit card lessons you need to teach
Before you can issue one to your child, you need to instruct them about various lessons about credit cards. Education is the primary weapon against debt and of course, following the right practices. But to be able to get the latter, you need to initiate by doing the former.
Here are the lessons that you need to teach your college student about credit cards.
Credit cards purchases are done with borrowed money. Your kid needs to understand that credit means borrowed money. Every purchase made must be paid off. More importantly, if that is not done within a specific time frame, they will have to pay more than the actual price of the purchase.
Credit card companies do not want to be kept waiting for payments. Just like you need to pay off clothes and your food before leaving the store or restaurant, credit card payments are expected immediately. Unless the purchase is advertised with a zero interest installment plan, the debt has to be paid off immediately. Otherwise, you will have to suffer the interest and penalty fees that will be imposed on the debt.
Credit cards have a grace period that eliminates interest. Some people fail to pay heed to the grace period. You need to teach you child about this because it will keep you from paying unnecessary interest fees.
Credit cards should only be used for emergencies. It is not advisable to use credit cards for ordinary everyday purchases. You need to realize that when you do, your balance may end up overrunning your payments. If you cannot pay the full balance, it will grow and grow until it becomes too much for you to pay off. Do not let your child end up this way.
Credit card receipts and statements must always be double checked. People can make mistakes and the same is true even for credit card companies. Make sure your child is being asked to pay only what they purchased. If they find entries that they did not make, teach them how to call up the credit card company. This will help them identify if they had been a victim of identity theft.
Credit cards can teach your child valuable lessons about debt, spending habits and financial responsibility. Just make sure that the lessons are deep rooted before you have them apply it to their cards.
Also, make sure you get the best rates based on your child’s spending habits. There are various options in terms of credit card types. Go to websites like Credit Cards. They compare various cards and their respective interest rates. You should be able to find the right card that your college student can benefit from the most.