Debt Views

Credit cards have become a way of life for many college students. As many as 92% of college students carry at least one credit card by the time they have completed their freshman year. Credit card companies are eager to give your child a card. With all the low rate credit cards available, how do you know which one is right for your college student?

Credit cards can help offset unexpected expenses, help pay for what loans and grants don’t cover, and help establish credit for your child. Whereas the first experience with credit for many students used to be through college loans, now the majority of students are introduced to managing credit through credit cards.

Many low rate credit cards offer zero interest for 6 months or more and rates between 10 and 20 percent following a no interest introductory period. There are also other perks, such as lower minimum payments, free balance transfers, cash back on purchases, no annual fees, airline miles, and many more. In general, the perks, of a low rate credit card for students are much the same as cards available to the general public.

Avoiding Credit Pitfalls For Your Student

Like most Americans, your student is faced with managing their credit on their own and must grapple with the desires and influences of a consumer society. The temptation to buy now and pay later is more than many people can handle and they end up drowning in debt. Using a credit card is very easy, but once you look at the minimum payments you realize that you will never get out of debt if that’s all you pay.

Talk to your child about effective ways to manage their debt. Teach them that paying only the monthly minimums while in college may be a good idea if the balance on the card is low, but that the longer they put off making more substantial payments, the more they will end up paying in the long run. Encourage your child to not get more than one credit card. The more cards your child has, the greater chance that they will spend beyond their means.

Practice some tough love. May parents are tempted to bail their children out if they experience problems managing their credit. While it makes sense in the short run, in the end it does nothing to teach your child fiscal responsibility, or about making good financial decisions.

Just about any college student can obtain a low rate credit card. They can come in handy while away from home and provide a monetary security blanket for your child while in school. Teach your child how to manager their newfound credit and you are not only helping them through school, but also making a huge contribution toward their successful life.