As college students are flooding college campuses, credit card companies are filling mailboxes with enticing offers for first time credit applicants. Many young adults today haven’t been taught how to use credit wisely and stay out of debt. With the new freedom of entering adulthood come many responsibilities first time borrowers may not be prepared for.
Parents should be teaching money management and financial planning skills to kids at an early age. It is never too early to start demonstrating the importance of saving money and following a budget. For many college students, that first credit card can easily get out of control. College students need to learn to live on cash and reserve credit card use for a rainy day, not that extra pair of jeans they want to buy. Credit counseling companies offer free resources available for anyone looking to become financially smart.
To prevent your college student from getting into debt and damaging their credit, teach them to follow a few simple guidelines.
- Don’t keep the credit card in your wallet, use it only in an emergency.
- Make a list of approved items that can be purchased with the card.
- If you can’t afford to pay off your credit card balance in 3 months or less, don’t buy it.
- Always pay on time.
- If you think you may miss a payment, contact the credit card company right away to request an extension.
- Pay as much of the balance as you can afford, not just the minimum payment.
- If you get in a pinch, ask mom or dad for help.