Teaching Responsible Credit Card Use


It is unfortunate that most students never receive formal lessons about managing their credit and debt. For many young people, the first contact with responsible use of credit cards will not come before they enter college – far from home and under the guidance of mom and dad. Upon their arrival on campus, new students will be seduced by the largest credit card companies, all eager to establish themselves as "the first card in your wallet".

If your child will go to university in the fall, one of the best things to do is to get him on the right foot for responsible credit management. Needless to say, the example is the best way to teach. The more responsibly you handle your credit card, the more likely it is to absorb your attitude towards credit card use.

Apart from that, however, one of the easiest ways to teach responsible credit card use is to co-sign a request for one of the credit cards specifically designed for students – and to do so. before they leave alone. Each major credit card line has at least one credit card with a low credit limit ($ 500 to $ 1,000), no annual fee, and a moderate APR.

Do your best to ask for the credit card. Explain that each credit card application that they fill out will be noted in their credit report (high school students will understand in particular the concept of "permanent record") and that the more they apply for credit cards, the more their " permanent record "is bad. will become. That way, when they arrive on campus, they will be warned against the myriad of credit card companies telling them that it does not matter.

Show them how to compare credit cards and determine what credit will actually cost them. If you're not sure about yourself, check out our articles on the annual percentage rate and how to calculate the cost of a credit card. Make sure they understand what is a "late payment" and how it will affect the charges on their credit card. When they understand that making a late payment will add $ 29 to their bill this month AND increase their APR so that each bill is now higher, they will be much more likely to understand the importance of making timely payments.

Finally, before releasing them with a credit card, take the time to sit down with them and set a clear budget that they can follow. Then set a monthly date to review the credit card bill and credit card receipts together. You will be able to monitor expenses and help them find ways to meet the budget while paying for their credit card correctly.

It's a common aphorism that it only takes 7 days to establish a new habit. Take a few months before your students leave for college to help them adopt good, responsible credit card habits. It's a lesson that will last them all their lives.

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