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Personal Finances / Credit Cards and Consumer Debt


Subject:  Re: Credit Card for College Freshman Date:  5/28/2007  12:32 AM
Author:  bingocards Number:  253684 of 312161

I don't know if "This gives me more control" is something you should generally be seeking over a college student. From my recent experience (turned 25 last month), getting to spread your wings a bit is sort of a foundational part of the whole getting out of the house thing. Your goal is presumably getting him off on a good footing for adulthood, so focus on that rather than trying to artificially extend adolescence until he is thirty:

1) Have the talk. Discuss all the sorts of things they don't teach you in high school -- what is a credit report, uses of credit as a tool, the very basic mechanics of a credit card which extent beyond "You put them in the cash register and your meal is paid for". Introduce him to the concepts "APR", "statement dates", and "online banking".
2) Suggest he apply for a regular credit card. Discuss what is appropriate to charge on the card (plane tickets home, visits to campus medical, discretionary expenditures which he pays immediately through online billpay) and what is not (anything else).
3) Let your young adult manage his own little slice of personal finances.

I was a similarly responsible young adult not too long ago and it was quite empowering to be the absolute and unquestioned master of my little $400-a-year discretionary budget. The only mistake I made in four years was NOT applying for a credit card, as if I had four years of age on a college Visa I'd be over 700 on FICO now, instead of looking at a clean credit report with a regrettable lack of history. (Somebody explain to me why "Retired $25,000 worth of student loans in three years" is worth less than "Kept a Visa open for 3 years and charged a haircut or movie rental on it every month". Ahh, the unfairness of it all.)
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