Advice for Talking to Your College Student about Credit Cards
Credit cards can be a valuable tool for college students, but they can also cause trouble if they come with high interest rates and spending limits. You can help your child avoid the common traps of high-limit credit cards by offering advice with the helpful tips below.
Understand how credit scores work
Using a credit card is the best way to build credit , so your child should not avoid a credit card altogether. Instead, you will want to teach your child that credit cards are beneficial when they are used for purchases that money is already set aside for. You might need to run your credit score as well as your child’s so that you have a visual demonstration of how certain purchases affect this number.
Set clear limits
It is ideal to start out with a credit card that has a limit of $500 or lower. There are many student credit cards with this type of limit offering incentives and rewards for certain purchases. You will want to explain to your child that it is important to stick to this limit and use it only for certain types of spending. Purchasing text books with a credit card can be a great strategy for the semester, but putting monthly expenses like rent on a credit card can be problematic.
Consult a professional
You may be just as overwhelmed as your child when it comes to credit card choices for college, so you might need to talk to a financial expert at your credit union to determine which cards are best for your child.
At GCS Credit Union, you can find options for student checking and savings accounts as well as financial guidance for any stage of life. Connect with our O’Fallon-area branch by calling us at (618) 797-7993 or visiting our website.