That’s the case facing incoming college freshman who are heading off
to college this month in droves.
When it comes to credit cards, college students should just carry one
card and use it judiciously, said Dave Barse, credit manager at Wells
Fargo Financial, Grand Chute.
“Put a balance on it and pay it off every month,” he said. “You’re
going to want some sort of credit history when you leave college. If
you’re organized and pay the credit card off every month that’s going to
help you gain credit depth.”
All credit cards are not the same. Interest and terms vary wildly.
Credit card issuers offer a wide variety of terms so it makes sense to
shop around, Barse said.
A lot of parents want their college-bound student to have a card on
hand for emergencies, said Tim Sciborski, vice president for lending at
Community First Credit Union, Appleton.
“You can add your kid to your credit card and they could get a credit
rating out of that, too,” he said. “What’s nice about that is you see
the statements. They’re coming to you and you may be paying them
anyway.”
This works by having the credit card company issue a card in the
student’s name with your account number on it, Sciborski said. “Some
credit card companies may not want to do that but most of them would,”
he said.
Not everyone needs a credit card and parents and students should
think twice before signing up for one, said Kay Bidwell-Aronowitz,
assistant director at the Financial Information Services Center (FISC)
in Menasha.
“If they don’t need a credit card the recommendation is to probably
use a debit card instead,” she said. “You can set it up so you put money
in your child’s account and they can pull money out of there. It’s much
more controlled than having the credit card.”
If a college student does get a credit card, communication is key,
aid Alan Prahl, FISC’s education manager. He stressed that parents and
students need to sit down before signing up for a credit card to make
sure everyone understands the consequences.
“Parents should tell students about expensive late fees and over the
credit limit fees, which are commonly $30 or more for each fee,” Prahl
said.
He also advises parents to help their child come up with a monthly
budget. “If your son buys things on his credit card, make sure he knows
he has to pay the bill,” Prahl said.
And advise them to pay the bill in full every month. “If they can
limit spending to what they can afford to pay each month, they won’t
pile up expensive credit card debt,” Prahl said.
For many college bound students, a credit card is their first
experience with credit — “which can be dangerous,” said Sciborski. “It’s
very important that credit is used only for emergencies or necessities.”