College student in need of a credit card? Look no further!
Since the vast majority of kids will get credit cards (It can be helpful for building a credit history), your role as a parent is to educate Junior about the process. Here are some tips for helping your first time credit card user get off to a good (or at least not destructive start):
- Pick a card with no annual fee -- There's just no reason to pay a fee on your first credit card. Few college kids spend enough money for any rewards to justify the fee. Generally this will mean paying a higher interest rate -- tell your kid the interest rate doesn't matter because if he ever carries a balance you will disown him.
- De-emphasize the whole rewards thing: remember, credit companies offer rewards because they increase their profits. Getting a $50 savings bond for every $2000 you spend might sound wonderfully financially savvy, but it isn't if the joy of saving induces you into overspending.
- Urge them not to place anything other than necessities on the credit card: textbooks, gas, and other costs that aren't likely to increase due to the convenience of plastic. Clothing and especially restaurant meals should be paid for with debit cards or, better yet, cash.