Should You Let Your College Kid(s) Have Their Own Credit Cards?


Parents with college age children often face a dilemma: should we allow our kids to apply for a credit card of their own? If yes, what if they become irresponsible and rack up credit card debt? These are the legitimate concerns parents should have.

On one hand, young adults need to build their own credit history. With good, established credit history young adults could get favorable financial treatment when someday down the road they need to apply for loans to purchase a house or a car, or rent an apartment of their own. Therefore, it is beneficial for college students to have their own credit cards and build good credit scores by using them responsibly and pay the credit card companies in full and on time every month.

On the other hand, some of these students are still in their teen years, and the freedom of having a credit card to use is too tempting. It is not uncommon for college students to abuse credit cards and accumulate debts that they may hide from their parents, causing financial damages to themselves and their parents.

So, after stating the pros and cons of giving college students a credit card of their own, what can parents do?

This advisor thinks that there are several steps which parents can do to maximize the benefits of letting your college age kids have their own credit cards while minimize its potential financial harms.

As a parent, you need to start fostering good financial habits of your children early, specifically, the habits of budgeting and spending within their means. Talk to your teenage children about financial responsibility and the harm of abusing credit cards long before you allow them to have one.

If you are still not confident about your children’s ability to handle their personal finance, alternatively, during their freshman and sophomore years you can give them debit cards to use. That way, you can monitor their spending while teach them how to spend responsibly.

Another option of giving your college students a chance of building their credit history is for parents to add them as authorized users of parents’ credit cards. But, parents be aware, you are ultimately responsible if your children rack up large credit card debt. So parents need to think it through before adding your kids as authorized users.

If your kids demonstrate financial responsibility during his or her freshman and sophomore years in college, then you can decide if they can apply for their own credit cards in junior or senior year.

 One kind of credit cards students and parents may consider is so called secured credit cards. These cards can be ideal for college students who have no credit history or income. These cards are secured with a cash deposit, i.e. $300 or $500, from the card owner. Other than that, it works like a regular credit card. This kind of card is not a debit card. The cash deposit serves as a backup, not a payment for the card owner’s credit card bill. Students still need to pay their monthly credit card bill on time.

Ultimately, it is parents’ responsibility to know their children well and provide continuing guidance and supervision throughout their children’s college years in order for the kids to reap the benefits of building good credit history in college.