Student Credit Card Tips for Parents (Part 4)

By Curtis Arnold, CardRatings.com Founder

Editor's Note: This article is the third in a four-part series containing consumer tips for parents of children and young adults.

I often speak on college campuses, and here’s what I tell the students: I know first-hand about the dangers of getting into credit card debt while you’re in school. Before I turned my life around, I had $45,000 in card debt and was under unbelievable stress. You probably have a credit card already, and if not, you will likely get one soon. Certainly, if lenders get their way, you’ll have a pile in your pocket by the time you graduate!

Three out of every four college students had at least one card in 2004, with the average freshman balance at $1,585, while many students maxed out their cards entirely, according to Nelliemae, the largest nonprofit provider of student loans. The typical undergrad card balance was $2,169, although newer estimates put it closer to $3,000. According to a recent poll, one in four college students has two to three credit cards, and nearly one-third say it’s difficult to keep up with expenses because they’re already in debt.

Card issuers spend millions each year aggressively marketing on campuses because they want to develop long-term financial relationships with you. Here are my tips for making the most of the situation:

1. Compare offers by reading the terms and conditions carefully. Choose the best card for you, regardless of the freebies. Ask for a low credit limit (around $500) so you won’t be tempted to charge more than you should, and steer clear of reward cards until you know you can use credit responsibly. (Studies show we charge more with them.)

2. Always pay your bills on time – not to do so means you’ll pay fees and a higher interest rate – potentially on all your debts. A spreadsheet can keep you organized and on time with your payments. If you might forget, consider signing up for automatic bill-paying.

3. Always pay off your balance. The first month you don’t, stop using your cards! Use only cash or a debit card until you’re sure you’ll use your cards responsibly.

4. Don’t use your card as a source of income. Take it from me, I know first hand how devastating this can be. Credit is a privilege, and it’s your responsibility to make sure it doesn’t become a peril and ruin your credit reports and credit scores.

5. Keep out of the malls, avoid impulse buying and focus on free activities – join campus organizations, volunteer for local nonprofits, take a hike . . . or you can always get a job.

6. Take a personal finance course ASAP. What you learn will be more important and practical for your future than what’s covered in most classrooms. Also, keep on top of credit news, so you’ll be aware of industry practices. For example, lately, banks have been lowering people’s credit limits.

7. Already in debt? Stop charging and always pay more than the minimum. If you’re carrying a balance on more than one card, you’ll save the most if you pay off the one with the highest rate first, then go to the next highest interest card, and so on.

8. Get help if you’re buried in debt. Not facing financial problems won’t make them go away. Talk to your family, a clergy member, a credit counselor (NFCC.org lists reputable counselors), someone on campus – anyone you trust who can help you figure things out.

Not to worry! Since you’ve already educated your kids about credit and debt, you won’t have to worry about problems like this when they’re off at college, right?!

To sum things up, giving credit to teens can be a double-edged sword. If handled properly (a good dose of parental involvement goes a long way), credit can really empower your teen and help your teen establish a firm financial footing. On the flip side, improper use can have a devastating financial impact on your teen and scar him or her for many years.

Given the importance of credit scores in our society today (a bad score can even prevent your teen from getting a job), I implore you take the initiative and help your teen develop positive credit habits. If you don’t, I can assure you your teen will likely be fighting a losing battle…one that all too often has deadly consequences. Good luck- you can do it!

You can also visit our student credit cards section to research the best student cards!

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This article was written by Curtis Arnold, a nationally recognized consumer educator and advocate. Curtis has been educating consumers about credit cards since 1998. He is regularly interviewed and quoted by respected members of the national press regarding consumer credit issues. His new book, How YOU Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line is available now! Order online and receive up to a 32% discount.

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CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

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Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thank you for your interest!

Interactive Credit Education for Students

By Michael Killian, CardRatings.com Reporter

Editor's Note: This article is part of a popular Q & A format series in which we interview experts and industry professionals that have made significant contributions to the credit card industry.

Now and then you stumble into a heretofore little known website that has the potential to significantly impact high school youth and young adults in a major way. I knew this was the case when I first saw the web site Consumer Jungle. This is a web site chuck full of advice and Internet-exchange styled materials for anyone… but especially our youth.

Consumer Jungle is designed to be an interactive aid to help high school students become literate, savvy consumers. It provides relevant consumer education in such areas as credit cards, transportation, personal finance, telecommunication, health, and e-commerce fraud. It offers interactive games, quizzes, and activities for the home or classroom with input from teachers, parents, and students.

I communicated with Robert Parlette who is a Consumer Law Attorney and major contributor of content to Consumer Jungle. I asked him for a bit of background on Consumer Jungle and learned that the site is owned by The Young Adult Consumer Education Trust (YACET) which is a national non-profit organization dedicated to promoting consumer literacy for young adults.

In communicating with Bob Parlette he added, “The official 501(c)(3) name for Consumer Jungle is ‘Young Adult Consumer Education Trust Group’. We adopted the name Consumer Jungle because it truly is a jungle out in the real world...somebody is always trying to take your money through some devious means.”

I continued questioning Bob on the site.

Mike: Consumer Jungle offers a main caption ‘Look for the hook.’ Can you elaborate?

Bob: I have long believed in the old saying there is a sucker born every minute. Everyday new scams are invented. Consumers need to be wary and always approach offers with a skeptical viewpoint. Look for the hook encapsulates that perspective.

Mike: What age group do you hope to reach and what are you offering to them?

Bob: The age group we focus on are older teens and young twenty year olds who are just getting started in life living on their own. We are offering tips on the practical problems they will be facing as they start out in life. These are things that young adults should learn from their parents or in High School, but don't. We address six subject matters:

1. Credit wisdom and using credit cards for "wants" as opposed to "needs" as well as the unseen hazards involving the use of debit cards.
2. Buying a used car and getting insurance.
3. Exposure to the hidden costs and pitfalls of cell phone plans.
4. Advice on how to avoid Internet fraud.
5. Tips on tenant rights and leasing an apartment.
6. Lessons on scams connected with health issues and diet pills, etc.”

Mike: What sources do you utilize when producing content?

Bob: Scott Kane and I are both consumer law attorneys and we contributed much of the material based on our own experiences. We have solicited input from businesses in the cell phone industry. We hired outside consultants in the health and internet areas.

Mike: I tried a few of your life simulations and found them very practical. What feedback have you gotten from young participants?

Bob: We have had this beta tested to a limited degree. The kids liked the concept but wanted instant feedback on the effects of their answers on their financial situation. We would like to partner with another organization to take this to the next level. Our resources are limited, but our ideas are many.

I would like to thank Bob for the time and energy he has devoted to Consumer Jungle and to commend him on his concern for the welfare of the young folks of our nation.

I think it is very fitting to conclude this piece with a quote from the Consumer Jungle philosophy: “The Consumer Jungle curriculum is based on a constructivist philosophy. We believe that learning is most effective when students have an opportunity to actively explore their world, gather information about it, and construct their own meaning from the experience….activities are often more relevant, engaging, and motivating to students because they are learner-focused and authentic, encourage critical thinking, and develop useful and long-lasting knowledge and skills." Between these words is an exceptionally powerful concept.

You can also visit our student credit cards section to research the best student cards!

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This article was written by Mike Killian, Founder of Learning Credit and Debt Management. Mike has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.

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CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

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Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thank you for your interest!

Student Credit Card Tips for Parents (Part 3)

By Curtis Arnold, CardRatings.com Founder

Editor's Note: This article is the third in a four-part series containing consumer tips for parents of children and young adults.



By the time your children enter high school, it’s crucial that they can separate out the marketing messages related to the incredibly tempting card offers they’re about to get … if they’re not receiving offers already.

Watch out! Card issuers know how much money we spend on our teens – and how much of their own money they spend. High schoolers are still a relatively untapped market (“unserved” in lender lingo), and issuers are going after this market with “prepaid teen cards” -- some of which accept 13-year-olds.

In response, we have to “double-down” on our efforts to teach teens the importance of budgeting and making conscious choices about spending, borrowing, and saving. For help, I recommend:

1. CreditCardNation.com, the site of Dr. Robert D. Manning, author of Credit Card Nation (Basic Books, 2001). Take his financial literacy quiz with your teen, and check out his budget estimator, which offers average salaries for various careers. Play around with the numbers and let your teen try to make ends meet.

2. The Jump$tart Coalition for Personal Financial Literacy, which has an online database for parents and students interested in learning more about personal finance, including credit matters.

Should Your Teenager Get a Credit Card?

I see valid arguments on both sides of this issue. While I’d never advocate a card for every teen, there’s security in knowing that your teen has a back up for emergencies. Also, believe it or not, using a credit card is safer than using cash and offers more consumer protections than a debit card. If your teen's credit card is lost or stolen, chances are, there’ll be zero liability for unauthorized charges. But most important, in my humble opinion, is that your child will have had experience with credit cards and all of their hidden traps … before they’re deluged by the “No credit check, no co-signer or no income!!” offers when they reach college. Ultimately, though, there is no black and white answer on this issue and I think a lot depends on individual circumstances.

There are now many prepaid cards geared to pre-college teens (teens normally aren’t legally allowed to get a credit card in their own name until they’re 18).Visa’s Buxx card, for example, is promoted as being parent-controlled, re-loadable, and a great way to teach budgeting and money management to teens. When it first came on the market in 2001, the Buxx card sparked a great deal of discussion. Now, there are several versions of this type of card, with a variety of enrollment and reloading fees.

Don’t be surprised if you’re soon pressured to get one by your teen! These cards are marketed to them as cool status symbols that make it easier to get the latest “must-have” stuff. The best of them offer online tools designed to help parents teach their youngsters about money, credit, and debt. Some also try to motivate high schoolers to learn more about managing money. Unfortunately, some focus mainly on encouraging teen spending and just give the education component lip service.

Many parents are attracted by the convenience of these cards, which can eliminate much of the need to give cash to their teens – meaning they’ll be spared numerous trips to the ATM and bank. I can also see them being of some benefit to parents who want to modify Elisabeth Donati's advice, and use a card for some of the money being spent THROUGH their kids, not just ON them.

Another plus is that prepaid cards are a lot less risky than typical credit cards, where you’re the one whose credit will take a nose-dive if your child does something irresponsible with your card … like taking out a huge cash advance. With a prepaid card, there’s only so much your teen can spend (the amount that is loaded on the card).

Unfortunately, most prepaid cards come with all sorts of fees that really add up. So while I’m all for teens getting some real experience with plastic before they leave home, the current prepaid teen cards leave much to be desired. I’ll bet better teen cards will be marketed soon, and in the meantime, you have other options that can save on the fees associated with teen cards.

For example, you can get a low-limit credit card, and let your teen be an authorized user. The downside is that your credit rating is the one that will be on the line, because you’ll be the primary account holder. If you’re choose this option, make sure you limit your risk by asking for a very low limit on the card, such as $200 or $300. One upside to this option is that this technique may help your teen start to establish a credit history as some card issuers report authorized users to one or more of the 3 major credit bureaus.

A final option is to get your teen a debit card (aka check card), and give her or her instant access to their own money in their checking account -- not money borrowed from a card issuer. One potential negative drawback is that instant access means a thief can spend all the money in a checking account in minutes, leading to bounced checks, overdraft fees, and a major headache.

If you’re going to allow your kids to use debit cards, make sure to find out the bank’s policies on debit card liability... If your child’s account is exposed to fraudsters, it will typically take hours to straighten things out – including credit reports and scores – even if all the money’s returned and the fees reversed. For additonal help, you can visit our student credit cards section to research the best student cards!

This article was written by Curtis Arnold, a nationally recognized consumer educator and advocate. Curtis has been educating consumers about credit cards since 1998. He is regularly interviewed and quoted by respected members of the national press regarding consumer credit issues. His new book, How YOU Can Profit from Credit Cards: Using Credit to Improve Your Financial Life and Bottom Line is available now! Order online and receive up to a 32% discount.

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CardRatings.com is the most comprehensive source for comparing credit card offers. CardRatings.com is pleased to offer consumers free credit card ratings.

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Please Note! You are welcome to republish this article as long as you state that CardRatings.com is the source for the article. You must also include a link to our website if you republish the article online. Click here for more details about using our articles and thank you for your interest!