Teaching Kids to Avoid College Credit Cards
College credit cards can be very complicated to understand for an advanced financial person, for new college students it is even harder to understand. Now is the time to talk to your kids (sons, daughters, nieces, nephews, or grandkids), about college credit cards. School is around the corner, so please get busy. Pull up a chair, sit down, grab your child, look him/her in the eyes and start talking.
Here are some humble suggestions for your conversation.
Start with credit cards and end with credit cards. Once they see the danger in credit cards all other budgeting matters should fall into place.
Why Your Student Needs to be Responsible Before Credit Cards
Impart the many evils of credit cards into their psyche by starting with the potential for financial ruin if he or she doesn’t understand how credit card charges work, (in particular, how college credit cards work). Don’t forget to mention the credit report, which will be of utmost importance when they apply for everything from jobs to cars and apartments, after college. Make sure you explain that the credit card report will follow them for life, and will be one major determinant that makes their life easier or harder depending on efficient bill paying.
How College Credit Cards Can Destroy Your Credit Before Graduation
The nuances of college credit cards are enough to ruin anyone’s college career. Most college credit card interest rate is far in excess of the average interest rate. Most college credit cards charge variable interest rates from 13% to 24%. That is bad, but the charges get even worse with hidden cost. The hidden cost can drive up the balance and quadruple monthly payments. The over-the-balance and missed payment penalties are atrocious for credit cards. A $30 a month payment could quickly swell to $300 with “missed payment” and “over-the-limit” fees tacked on.
Now you see why credit card companies are so anxious to give out credit cards to young, over-spending, credit-naive college students. Some students already have bad credit or don’t have a small job that some require, therefore they are forced to get “secure” credit cards. The cards are secured with their own money. The cost can also be high with these cards. Since the cost are hidden in many of these cards it is important to do a lot of interest rate research, verify the over the limit and missed payment cost.
How Credit Card Companies Contact College Students
Most college campuses do not allow credit card companies to set-up tables on campus and sign up students anymore. Don’t think this has stopped them. Credit card companies have managed to “mysteriously” get phone numbers and addresses of college student, (I wonder how?), then they ferociously contact them day after day to get that coveted college credit card account. I should know, my niece used our phone number and address as her permanent address when she started college in our town. I received 4-5 calls PER DAY, from 4-5 DIFFERENT credit card companies, all for my niece. I’m glad they didn’t have her dorm room number.
The Case For Not Getting College Credit Cards to Your Student
Now, for the renegades. There will be a few of you who have college students who will apply for a college credit card just because you have counseled them not to. I recommend you end the conversation as such, “if you ever get a credit card, please be aware of all of the charges, get ONLY one, and use it ONLY for emergencies. Remind them that they don’t want to pay ten times more than original cost for everything they buy because of excessive interest charges.
How You Can Get Your Child to Understand the Personal Finance Issues That Will Effect Them For Life
Final instructions, if you want to impart the highest level of financial wisdom on your child, download my eBook series at Amazon, “Live Rich Save Money” then take my “Savvy Money Tutorials“. Use my eBooks and Tutorials together to get a better understanding of money and it’s principles. Use my Budget Planner to show your student how to create the right budget for everything he or she does. The proper financial knowledge early will save him/her from years of mistakes and financial misery. Whenever your college student brings up issues you can refer to my eBooks, Tutorials or Budget Planner.
Final Words of Wisdom for Your Student
So, sit down, pull up a chair, look your college students in the eyes, tell them how much you love them, and proceed to impart the former words of wisdom. And, lastly, tell them that college credit cards are not financial aid and were never not intended to be.
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How to go to College Without Student Loans, Get Debt-Free College part 1
How to go to College Without Student Loans, Debt-Free College Should be Your Goal, part 2
How to go to College and Pay Off Student Loans, Debt-Free College Should be Your Goal, part 3