It is so important for college students to learn good money management habits and build and maintain a good credit record. Doing so can have a major impact on the financial future they want and need, for the rest of their life.
There are several ways to help them accomplish this. Below are two to get you started.
#1 Have the student’s mail sent to your home and not to the student
Credit card companies make it very easy for young adults to get into debt quickly by sending them pre-approved credit cards. Let your student know that you will be throwing out these offers. It is not okay to spend money you don’t have and doing so now can dig them into a hole that can be extremely difficult to get out of.
#2 Obtain a collateral credit card in the student’s name
Many banks and credit unions offer a low limit credit card in the student’s name when someone puts up a collateral deposit to assure repayment of charges. For example, the parent gives the bank $500 to set aside in a separate account to secure charges on the student’s credit card up to the $500 limit set on card. Over time with on-time payments of all charges, the student builds credit in their own name and eventually the parent can remove themselves from the card and take their $500 back. It is important that the student understands how this works and they have an agreement with the parent regarding what they can charge on this card, such as school books, doctor visits, medication, etc.