Students and Credit Cards: How to Teach Them How to be Responsible with Credit

If your child is about to start college or university, he or she will be adjusting to a new independence. Part of this phase of life involves learning how to manage money on a daily and monthly basis. What do you think about college students and credit cards? How have you prepared your child for handling credit?

College Students and Credit Cards: Educate your Child in Advance


You wouldn’t hand your child the keys to your car and expect him or her to know how to drive without getting some instructions first, and you shouldn’t expect them to navigate through the world of credit without getting some information about how it works, either. For most students, this is probably their first credit card and so they most likely do not understand things such as interest rates or repayment expectations. This is why they tend to get into trouble.

Having a credit card as a college or university student is important because a young person can start building their credit rating and learn to develop responsible spending habits. As a parent, you will need to educate your child first before you hand over a card.

Set Clear Boundaries Around What the Card is to be Used For


You should have a conversation with your child about acceptable uses for the card. They may include the following:

  • Emergencies (you will need to define what constitutes an emergency)
  • Basic expenses while living away from home (as agreed to)
  • School supplies
  • Travel expenses to return home at the end of the semester
  • Clothing and personal care items (as agreed to)
  • If you agree that your child can use the credit card to pay for certain expenses, set a monetary limit per item or per month. You may want to agree that if something comes up and he or she feels that a higher amount needs to be spent, that you will need to be consulted first. That will accomplish two goals: you will have some input into your child’s spending habits and your child will get in the habit of stopping to consider a purchase before simply pulling out the credit card and buying something on impulse.

    Avoid allowing the kids to use the card for fun or lifestyle expenses such as eating out with friends, concerts, random travel, excessive shopping on non-essential things. The credit card should be there for basic needs and emergencies. Your child should have a job to pay for these other expenses.

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    Alternatives to Help Students Avoid or Mitigate Credit Card Costs


    To help students get used to using credit cards, start off with a prepaid card. This will let them understand how credit cards work and let them practice using the card responsibly. Once you feel comfortable that your child is mature enough to handle a regular credit card, you can make a switch.