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  • Kimberly Stone

College and credit cards: A good mix?

Credit cards are easy to get, but managing their use is a learned behavior. We live in a plastic card society whether it may be a debit or credit card. It seems many of the younger generation do not even use paper checks, so this question of having a credit card for college is an important decision. Parents will need to educate their child on the proper use of credit cards and how interest rates compound on unpaid balances.

If you've gone back and forth about whether or not it's a good idea to send your child to college with a credit card, you aren't alone. Opinions are divided, both among parents and financial advisors. The outcome depends on the kids and the parents.

On one hand, there's a potential that everyone will benefit. If your child uses the card for budgeted expenses and then pays off the balance each month, they'll start to build good credit history. You'll sleep better knowing your child has a credit source in case of emergencies.

On the other hand, if your child isn't used to managing money or living within a budget, they might fail to make payments on time and end up with bad credit history. Worse, you may have to step in to bail them out.

Here are some tips to help minimize the risk of your child's credit card experience going south:

  • Set ground rules. Agree on what the credit card may and may not be used for while at college. Establish good habits for making timely bill payments. Put the agreement in writing and have your child sign off.

  • Create a budget. Talk regularly about how they are managing their expenses within the plan. There can also be credit limits set so that the card can only be used up to a certain amount.

  • Consider alternatives to a credit card. For at least the freshman year, think about using a prepaid credit card, or set up a checking account with a debit card. This will allow your child to gain experience managing expenses within a set budget.

Finally, remember you may have no say in the matter. Students are bombarded with credit card offers as soon as they enroll. Credit card companies are usually happy to issue a card to any student over age 18 in his or her own name.

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