My Story with College Credit Card Use
When I went off to college I didn’t have a credit card. My parents gave me a checkbook and was told I needed to call them when I was going to write or cash a check for spending money. Nice system that lasted for a while. But then I got asked to apply for a credit card in exchange for a free t-shirt. Before you knew it, I had a Discover Card waiting in my mail box.
I’m sure my parents had sat down at one point and talked with me about the dangers of credit cards, but I don’t think they expected me to end up with one without them knowing about it. Long story short, I left college with about $2,500 in excessive credit card debt on 2 separate cards, and my parents never knew much about it. Had I told them, I’m sure they would have told me to only use it in emergencies, and not to carry a balance or max out the credit card limits.
Does the CARD Act Change Your Approach?
Congress recently passed the CARD act which makes it harder for college kids to gain access to credit cards without the parents knowing about it (the kid will need a co-signer or show proof of income). Still, I doubt all the loopholes have or even should be closed with regard to granting college kids credit. In effect, we parents have failed to teach our kids how to handle a credit card or we don’t want the responsibility of doing it. Therefore, the government has taken over the situation and will tell your kids how they can access credit going forward.
With the new reform, does it mean we parents shouldn’t take responsibility for helping our kids understand the dangers of credit cards? Things like how interest charges work, all the fees that can be imposed, and the impact to a credit score. Is the best policy to completely abstain from using cards until they graduate? Wouldn’t this set them back a few years with regard to building their credit.
Resources
Grant Baldwin, author of Reality Check, The Students Guide to the Real World recently put together a teaching curriculum for his book. He’s provided a free download of one of the lessons to the PT Money readers. Download “Credit Crunch”, the curriculum guide for teaching your kids the dangers of credit cards. Used in combination with the book, the curriculum would be a great resource for you, your youth group leader, day camp counselor, or other kids group leader to use to help kids graduate to the real world.
Other great resources for teaching your kids about money include (mainly for younger kids): Planet Orange, US Mint for Kids, My Savings Quest, and Kid’s Bank.
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Thanks for the shout out PT!