Student Tips on Smart Credit Card Use

When you send your child of to college I am sure that you have sat them down and warned them about the dangerous they may face. But most parents don't even think to warn them about credit cards. See, when your child shows up to campus to get settled in it will be very hectic. There will be many people handing out different kinds of information and brochures. Some of them will be credit card applications.
The applications are very easy to fill out and if your child has not been warned about the pitfalls of getting credit cards they may look at them as free money. They are anything but free money and the damage they can cause to their credit ratings can haunt them for years after college.
Almost every student that fills out a credit card application will receive a credit card. Most will have a credit limit of between $200 and $1000. Won't they don't usually realize is that the interest rates will be very steep, unusually up around 28%.
So before your child leaves for school, sit down with them and give them tips on smart credit card use:

1) Use the card for emergencies only. You may need to explain that not having pizza on Friday night is not an emergency. Having to replace a flat tire is.
2) Never carry a balance, if you cannot afford to pay off your purchase the next time you are billed, don't use it.
3) Since many of them will not follow rule #2 explain that they can never only pay the minimum due. At 28% interest and paying the minimum balance you could actually owe more after you make the payment.
4) Never pay a bill late. Paying late fees is crazy. If you bought a CD for $20 dollars and you pay late, by the time you add the minimum late fee of $25.00 to the payment you have now bought the CD for $45.00.
5) The minute that you see that you have gotten yourself into trouble cut them up. Fix what needs to be fixed immediately, the longer you ignore the problem the more costly it gets.
6) Limit the number of cards that you have. I would suggest that they only carry two, a MasterCard or Visa, and a gas card. This allows them to purchase any thing that may come up.

They should also know that the credit card companies do not care why you cannot pay; they just want their money back. So using a credit card to try and stay afloat when your studies are overwhelming and you cannot work as many hours is not a good idea. Tell them to try and tighten their budgets and live within their means.
Make sure that your child really understands the repercussions of using credit cards irresponsibly. Getting credit to begin with is easy and so is ruining your credit score. If they ruin their credit when they are 18or 19 years old that will stay with for at least 7 years and will effect them in ways that may not seem important now but will be when they are looking for car insurance rates or apply for a job.
Even if your child uses the credit cards somewhat responsible but still carries a balance the interest rate alone with have them paying off that credit card after they have graduated and are looking for their first job.
Hopefully before they leave home you will have taken the time to explain all the pros and cons of using credit cards. Take the time and teach them to budget their money correctly so that they will their credit cards sparingly. Then when they actually need to use them the will pay them off as quickly as possible.
They should also realize that if they end up with more debt then they could ever repay that with the new laws in place it is very difficult to try and declare bankruptcy. If they do actually file bankruptcy the damage done to them will take many years to recover from it. And whether it is fair or not, a lot of employers now will not hire people with bad credit ratings.
So hopeful these tips will help your college student learn to use their new credit card is a very smart way.