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 In fact, a recent survey of 42,000 first-year college students found
that the earlier teenagers had access to credit cards, the less
prepared they felt for managing their own money in college.
Those who had checking accounts, by contrast, were "markedly more
prepared" to handle their finances than those who were unbanked
before college, according to the study conducted by education
technology company EverFi and sponsored by financial services
company Higher One.
The findings match up with the experience of Janet Bodnar. The
editor of Kiplinger's Personal Finance and mother of three college
graduates sees credit cards for college students as dangerous and
unnecessary.
Young people need to have finite amounts of money to learn essential
skills such as budgeting and monitoring their accounts, said Bodnar,
author of the book "Raising Money Smart Kids."
Ideally, students would start with a checking account in high school
to manage income from their first jobs. Children who are not
spending their own money often have a flexible definition of what
constitutes a financial crisis, Bodnar said.
"An emergency is needing a dress for the sorority dance, or picking
up the check for everyone at the pizza place because nobody has any
money," she said. "You think of plastic ... as a convenience. Kids
think of it as a direct line to your wallet."
PLASTIC CAUTIONS
Personal finance columnist Kathy Kristof, who also writes for
Kiplinger's and who has sent two children to college, is on the
other side of the fence. She thinks a credit card can make sense for
some families.
"For parents who know their kids and have taught them how to handle
money, it can make your life easier," Kristof said.
College students typically can qualify for their own credit cards,
without a parent co-signing or any credit history, when they turn
21.
If parents want to help a child build a credit history before then,
they can add him or her to one of their own credit cards as an
"authorized user." (Parents should call and ask the issuer if it
will export their account history to the child's credit report,
since some will only do so for a spouse.)
Kristof gave cards to both children, one a college graduate and the
other still a student, to book flights home and cover emergencies.
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"I'm happy to have the kids as authorized users because I can see
what they're doing and rip the card out of their hot little hands if
they abuse it," Kristof said.
So far, her daughter has always checked in before using the card.
Her son, however, will sometimes use it without asking but will tell
Kristof and pay her back before the bill arrives.
Kristof said she would not let her progeny get a credit card if she
could not see the bills. Even a responsible college student can get
distracted and forget to check the balance or make an on-time
payment.
Just one skipped payment can devastate credit scores.
"What you don't want to do," Kristof said, "is put your kid in a
situation where they could get credit dings before life really has
gotten started."
Bodnar cautioned that students who run through all their money
should have to make a case to their parents about why they need
more, not an excuse for what they already spent using a credit card.
"If they really need money, there are plenty of ways to get it to
them fast," Bodnar said, such as bank transfers or a system like
PayPal or Venmo.
(Editing by Lisa Von Ahn)
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