My son will be going away to college in August.
He is 18. Just graduated from High School yesterday.
He is a responsible kid.
I am thinking of adding his name to the credit card account with my wife and I.Then, he would have his own card, but all 3 of us would be on the account.
I am asking if others have done this and if it is a good idea.
I trust him, but my only fear is that he will lose the card.

The whole deal is this: he need some money for day to day expenses. Is there another way to do this that makes more sense?

I gues we could give him a few hundred dollars cash we he leaves, and maybe wire him some cash every couple of months.

I just don't know the best way to handle this money situation.

Of course, he has been bombarded by several credit card companies because they know he is agoing away to college. The college (University of Illinois, Champaing-Urbana) has even sent some info about TCF bank located on the campus.

Like I said, I trust him, but I would like to keep an eye on him financially for at least his first year away, and maybe having him on our credit card is one way to do that.

As always, any and all ideas are appreciated.
Thanks.

Like I said, I trust him, but I would like to keep an eye on him financially for at least his first year away, and maybe having him on our credit card is one way to do that.

As always, any and all ideas are appreciated.

Congratulations on the new graduate!

First, I'd suggest that at some point in the next couple of months, you and your wife sit down with him and discuss credit cards, debt, long-term interest plans, and why having huge debt can derail plans. There are plenty of people on this board who are still paying off some pizzas and beers from their senior year in college. I suspect that most of them will be delighted to explain why it was a mistake. Help show him how running up debt now ("I just gotta get these new sunglasses!") can help wreck future plans. You can also discuss budgeting, planning ahead, and so on.

Here's an article from the Washington Post about college students and credit card debt. You might want your son to read it.

http://www.washingtonpost.com/ac2/wp-dyn/A56633-2003Aug27

Second, instead of putting him on your own card, you might want to look into some form of secured credit card. Essentially, you load the card with cash at certain specific, set intervals. Your son can then use the card as much as he wants, until he runs out of money. If he wants to earn money and reload the card, he can. If he has had a certain major expense that was unlooked for, he can call you and explain. You can reload the card if you believe that this was a reasonable expense. In fact, you might want to get this started now, during the summer. That will give him an opportunity to start experimenting, and to see just how fast $150.00 can disappear if you aren't paying attention.

Here's a list from Bankrate.com of secured credit cards. You can also check with your local bank to see if they are willing to handle this.

http://tinyurl.com/mabp

And congratulations on thinking ahead and examining the problem, rather than assuming that all will be well. It sounds as though you've been good, responsible parents.

Nancy

Like I said, I trust him, but I would like to keep an eye on him financially for at least his first year away, and maybe having him on our credit card is one way to do that.

Does your son have his own checking account now? If not, this would be a great time to have him open one. Try to open an account at a bank that has a branch near UI. You need to teach him how to balance his account, so he can understand that just because the ATM says he has money, it doesn't mean he does. Since it's a local account, it will be easier and cheaper than wiring money to him. In my (admittedly dated) experience, most merchants in university towns have pretty lenient policies about out of town checks. If this is not true anymore, have him open his a local account that can be linked to one of your accounts.

Set some limits for him, like 'only $40 cash out every week' or something, and set some consequences if he violates the limits.

Making him an authorized user on your credit card account, for emergencies and pre-approved purchases only, is a good idea. Another idea might be to open a new joint account with him, again, for emergencies and pre-approved purchases only. Go through the statements with him, and make sure that he understands not having money for pizza on Saturday night isn't an 'emergency'.

Encourage him to not apply for a credit card without telling you about it. You won't be able to stop him from doing this, but let him know that you will periodically have him pull his credit report to confirm whether he has opened new accounts. This can be part of the condition for you continuing to support him throughout college.

Help him understand the concept of budgeting - freshmen don't necessarily understand how long a semester is - that if they have $500 spending money for 4 months, it means $25 a week; not spending $250 in the first week. Or if he does spend $250 in the first week, it means that he only gets $12.50 a week for the rest of the semester.

I handled all of my banking in college on my own, but I had a checking account from the time I was 14, and credit cards for students hadn't really started to take off yet. I did have a credit card tied to the credit union that was at my father's workplace.

AJ

My son ... is a responsible kid... I trust him ...

Then you are in an excellent position. Whether he gets a cc, or you just transfer $ to his checking account, or wire him cash, it will be fine. My recommendation is to do whatever he thinks will be most convenient for him, and IMHO a cc is most convenient. Some colleges let students use their student ID's as debit cards (at the bookstore, cafeteria, etc.), which is nice on-campus, but useless for off-campus activities.

For both my kids, as soon as they got their drivers' licenses, DH & I got them credit cards. The cards had the kids' names on them, but the accounts were in DH's name, and we paid the bills from DH's checking account.

They were to use the cards for gas, clothes (to a pre-agreed limit), and school expenses. They could use the cards for whatever else they wanted, too, and when the bill came they'd reimburse us.

That worked. When DD was a college junior, she got cards in her own name. She preferred taking care of her finances without DH & me seeing the bills, which made sense.

When DS went to college, he got a card in his own name as a freshman, but the bills still got mailed to DH & me, because that's the address the cc company had. Right now we're in the process of switching the billing to his campus address so he can have the experience of paying the bills himself. Of course, he has almost no income, so when he gets a bill he tells us the amount we need to transfer to his checking account so he can pay it.

I think it's good for parents to be involved in their children's credit card use for a while as the children get some experience.

...my only fear is that he will lose the card....

If your DS loses the card, you can call the cc company to have it de-activated temporarily. When the card is found, you can call back to have it re-activated. Or, they can issue another one. This is not a big deal, but could be a nuisance if it affects your and your DW's account, so you might prefer DS has his own card for that reason.

FWIW, www.citicards.com has a link for college students. The catch is that he has to be enrolled, so he might not be able to get the card until about late July or whenever you pay his fall tuition. (I tried to get DS his card when he was a HS Senior, after he'd sent in his acceptance, but no dice.)

Good luck!

Greetings, bigdan, Windowseat has a great idea in sitting down with your son to discuss debt and how credit cards work. What about taking that a step further during the remaining summer months and talk with him about budgeting, then having him practice living within his budget while still at home? You could discuss what came as a surprise for him and about how to apportion expenses over time so he understands he has to save for tomorrow's expenses out of assets and income today. My parents did a version of this with me, most particularly when I was planning to move from the dorm into an apartment (not right after freshman year but soon enough). I think it is not at all too soon to begin the conversation about money management.

I further agree with aj485 about making him an authorized user on one of your credit cards. You keep your credit standing protected that way (not dependent on the vagaries of his timely payments, and I know you said he is a good kid) but that gives him the cushion he needs for you to feel safe that he's covered in an emergency.

Around the time I was first in college, I obtained my first credit card. It was a store card, if memory serves, but my parents were careful to instruct me in how to handle it carefully. Before I graduated, I had a card from a major issuer (probably a Visa) and I always handled it responsibly - paying it off every month and only buying with it what I had already saved in advance for, because I was operating from a budget. I also did part-time work in college, working in the dorm cafeteria, then at waitressing jobs and summers I worked at the campus carwash pumping gas. Not so many hours that it interfered with my studies (I have concurrently-earned degrees in chemistry and in mathematics) but enough to fund my own expenditures. My parents had agreed to pay for tuition, books and rent/housing (and food when I was living in the dorm). Everything else was my responsibility and they helped me plan how much to expect things to cost - plus it had already been drummed into me that I needed to save some part of every dollar I earned so I was well-used to thinking that I could not spend up to the dollar amount of my paycheck. The everything else included expenses for the car I shared with my brothers such as gas, insurance, license fees and included paying for entertainment and dates and clothes. I give my parents credit for helping me practice how to account for what it cost to cover these expenses and to plan in advance for them as well as for UNEXPECTED expenses (as in an e-fund). It may not have been fully underway before freshman year started but it got underway by then so I offer it here for contemplation.

xraymd

Congratulations on your son's graduation!

I am glad you are thinking ahead and concerned about your son's financial issues and CC temptations.

Some ideas
- If you and/or your wife balance the checkbook, show him the steps when you do an ATM withdrawal or write a check. Point out the dire consequences if one writes a check greater-than-the-balance. I vaguely remember the bank employee asking my mother, "Overdraft protection?" and my mother saying "Yes, indeed". I do know banks charge a whole lot more for both overdraft protection and overdraft fees.

- A Credit Union at the college?
Sure they do-- here's the link
http://www.uiecu.org/asp/home.asp
I remember opening up an account at my college Credit Union, and CU checks happened to work very well for purchases on campus- bookstore, campus stores, local businesses (pizza shops, etc)

- College ID cards
Some colleges have their ID cards serve as a "stored value" card for college related transactions e.g. dining commons, on campus purchases, etc. Yes, one could lose the card, but the colleges are likely well organized for dealing with lost ID cards (since the ID cards serve lots of functions on campus). Students keep a close on their ID cards since it might serve as their room/building access, etc.

- When I was in college, there was some restriction (likely age) on when a student could get a CC card. I suspect the rules might have changed.
The credit card companies will be there signing up students for CCs and offering different "cool" promotional items (in my time, it was T-shirts and frisbees, but I am sure it's more sophisticated stuff like ipods/accesories, memory sticks, etc. now)

- Someone suggested pulling the student's credit report once or twice a year. Perhaps a carrot-and-stick approach. Tell him you will be pulling the credit report, actual review it, and reward him for a clean report. That's one way to see if he opens a CC account and his utilization %


Good luck
Hohum

I like the idea of a pre-paid credit card. He has to stay within that limit, and it won't give you any surprises when the bill comes. You have a lot more control over it that way, IMO.

Love
Loving

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.)

I agree with the idea of him opening a bank account. If possible, I would find a bank that has a branch close to campus for him and another branch close to were you live. It's very easy to deposit money into someone else's bank account. You just give them the check and account number. Since your only putting money in, the bank doesn't really care who you are.

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:
*******************
I wasn't coming from (or didn't think I was coming from) a perspective of controlling the student. I was thinking of it more as control over the parents' money, since it is THEIR credit card they are thinking of handing over to him.

Yes, the kid has to learn responsibility. But if he is given carte blanche with Mom and Pop's card (and THEIR money), is that really going to teach him anything? If he is given a card in HIS name, with a specified amount on it, he will have to learn to live within that amount or figure out a way to get more money. To me, this is no different than my mom sending me a check every month when I was in college and me having to figure out how to make it last. (Actually, the last year the check came from the VA, but I still had to learn how to stretch it.)

By the way, I really liked the rest of your advice. It sounds like you learned a lot in college (and not just from books, either!)

Love
Loving

I don't know if I learned a single thing about finance in college, other than that if you spend $3.50 every day on cheese sticks you end up having to refill your meal card a month early, a process which actually costs money.

Probably 60% of what I know about finance comes from Dad teaching me to read out of the Wall Street Journal ("Dad, whats a dewibativ?" "I'll tell you when your older, son"), 20% comes from being a math nerd, and 20% comes from practical life experience. And really, all the math you need to know for personal finance they teach you by the end of middle school.

And really, all the math you need to know for personal finance they teach you by the end of middle school.

Greetings, bingocards, that's just the nuts and bolts. What they FORGET to teach is how will that math hogtie you and lash you to a pole while the lightning storm of interest owed threatens to strike you with regularity. Because of what we never connected of our lessons to the real world out there is exactly why there is a CC/CD board at the Fool, and bless the Motley brothers for having created this venue when our 8th grade teachers did or could not.

xraymd

Great advice, I just wanted to add one thing. Try to find out which bank has ATM's on campus. Open an account at that bank. This will save on ATM charges while withdrawing cash over the next few years.

And really, all the math you need to know for personal finance they teach you by the end of middle school.

---------------------------------------------------

Greetings, bingocards, that's just the nuts and bolts. What they FORGET to teach is how will that math hogtie you and lash you to a pole while the lightning storm of interest owed threatens to strike you with regularity. Because of what we never connected of our lessons to the real world out there is exactly why there is a CC/CD board at the Fool, and bless the Motley brothers for having created this venue when our 8th grade teachers did or could not.

xraymd

Math gets its Revenge! :-)

I bow to my master in the colorful turn of phrase. :-)


--Booa

It may make sense to add him to the card for emergencies, but if you want to give him a set amount for day-to-day expenses, you may just want to deposit the funds in a checking account. That's what my parents did for 'fun money' when I was in college. I supplemented the balance with money from my own on-campus job. If he opens an account with TCF, he will likely get a check card, which he'll probably use like a credit card so you can ask to see his statements and track where his money goes. (FYI - I currently have a TCF account and I'm very happy with them - good interest rates and comprehensive account statements. I'm not sure what their deals for students are like.)

I guess I'm leery about putting him on a card for more than just emergencies. One of my old roommates in college was put on her parent's credit card, and during sophomore year she managed to charge $3,000 in one month alone! She managed this even though we lived in the dorms and she had a full meal plan. I'm sure that today she can't even remember what she bought. (I do remember that there was a beaded dress that she couldn't even fit into!) Never underestimate the ability of college students to be complete idiots with money.

I graduated in 2004. When I first went off to college, I already had a checking account and Mom opened a card just for me and her. It was an emergencies only card. We were both users on the card. If something came up where I legitimately needed money (Mom, the car needs an oil chnage) then I used it and she would pay it off in full. My day to day expenses were paid out of my own checking account. My parents would deposit $300/month and I used it as I saw fit (mostly on food and gas).

My junior year I moved off campus. My parents upped my monthly allowance to $800/month (the $500 came from what campus housing HAD been costing them). This paid for rent, utilities, etc. And I got my own card, a Discover student card with a $500 limit. I started paying for all my own expenses (including things like oil changes), and if my monthly allowance didn't cover it I'd pull some out of savings from my summers' earnings.

This system really worked well for us. The big help was the fact that my parents had access to my checking account. So if I really needed money, they could put some in for me.

I'm not sure how much you planned on giving him (I know some families expect their kids' to pay for their own expenses in college). But I recommend that whatever you choose, do it on a monthly basis so that he gets used to budgeting.

My first roommate's parents were the polar opposite of mine. They signed her up for big meal plan and told her that she didn't need extra spending money since food, tuition, housing, and books were taken care of. That's true, but my parents were actually spending less on me because campus food was expensive (it was cafeteria style, $8/meal no matter what or when you ate). But it worked for her.

I feel the best way for a young adult to learn personal financial management is to open and use a standard checking account rather than a credit card. A checking account teaches one to have money and then spend it. A CC teaches the reverse.

A checking account opened jointly with a parent allows the parent to track activity and make deposits for the student, without the risk of overspending that a CC allows. My parents did that for me - my mom had me open a checking account before going away to college. It was a joint account so my mom could make deposits for me (only did so once). And I didn't learn to spend money I didn't have with a CC. Well, I did later, but that was my own fault, not my parents'. My brother and sister followed similar tracks and are both also fairly smart with money. Neither carries CC debt now.

I managed my own money all through college, starting with that checking account and adding a CC shortly later. My college case is a bit unusual though -- my college (Stevens Tech) has a co-op work program where you spend every other semester working an internship. So after freshman year, students make real money instead of relying on parental allowance, and that's how I paid for college and my own spending money. I graduated with only about $12,000 in student loans and $3,000 in CC debt (mostly from computer upgrades and other entertainment), and paid everything off within two years.

It's natural for a parent to worry about "emergencies", but the reality was that in five years of college, I never had a single time when I needed a CC and would have been in trouble without one. CCs are certainly more convenient for online purchases -- but maybe that convenience isn't appropriate for a young college kid.

"I haven't got money for pizza tonight" is easy to disguise when a CC line of credit is available. It's much more obvious when the ATM says $0 and won't give you cash. If that happens, it's a lesson that few kids will forget. I speak from experience. :)


To answer this from bingocards:

(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.)

Maybe you're asking rhetorically, but there is an earnest answer. Historical data. The FICO system sees that future reliability is predicted better by past regular Visa use than by past rapid student loan payoff. Many technology and business degree holders have blown away their student loans with a six figure income, then overspent their CCs on vacations and home decorating. The FICO system might see you as such a potential risk until you generate more data to show them that you do handle CCs responsibly.

- Erik

Here's my past experience with college and credit cards. Son #1, opened a new account with my and his name on it. The idea was for him to have a card for emergencies. While he was in college, he received a cc application which he was accepted with a card in his own name. No problems with charging on either card and the joint card was closed a year or two later.

Son #2 received an offer after HS graduation. Applied and made the mistake of being a co-signer for the card. Son #2 used the card unwisely and it shows up on my credit report (may be off now since I received a letter saying they no longer offer that type of account). In any case, we forced him to close that account when he got a new card.

Son #3 also received an offer after HS, but this time no co-signer. He used his card wisely too. The only problem was the low limit. We wanted them to have a card in case they needed to fly home in an emergency. His limit was low enough that he could only do that if he had a near $0 balance. Had him apply for a second card which gave him a $1,500 limit (the first card later matched that limit, after hearing a recorded message they wern't increasing limits at that time).

So from experience, we've had mixed results, two good and one bad. The main thing is that you can't keep an eye on him financially if he doesn't want you to do it. First off, the college will not share information with you (unless you can get written permission from your son). Your son will get card offers in school so he can open a new account without your knowledge. Of our three, two were secretive on their finances. One planned well and let us know months in advance if he needed additional loan funds. The other let us know a week or two before tuition was due.

My suggestion would be to see if he gets any card offers after graduation and have him apply on his own. He should be working this summer so he can put that down a monthly income number. If he get no offers or is declined, open a joint account (not a co-signed account), so you can at least monitor that he pays on time. Once he builds a credit history, he should get offers for a card in his own name.

Calvin

<<<My son will be going away to college in August.
He is 18. Just graduated from High School yesterday>>>>>>>\\\

Bother, I hit submit instead of preview--I wanted to check the italics...

****************
Oh well, congratulations to your son on his graduation.

There are several ways you can handle the money situation.
First of all, check the college website for info on the student ID card.
Most cards these days do many other things--open doors, serve as a meal card, serve as a debit card for things like copying, vending, etc.

At DD's college, many off campus places also take the card. For instance she can order out Chinese and "charge it" to her card.
the one thing she can't do is make a cash withdrawal.
Our state university lets you put money on their ID cards with a credit card, but her university does not.

At the beginning of her freshman year, we put $800 on her card to pay for books and her other expenses. The card also serves as a meal card but we paid that separately. Also when we left her, I gave her about $130 in cash. That went a lot faster than we expected because one of her professors ordered the books for his class through a bookstore that didn't accept the card. She ended up buying several of the books used thru Amazon.com

Throughout the semester I would send her $20- $30 through the regular mail. I figured if one letter went astray, I wasn't out very much. Also she enjoyed getting real mail in her mail box.

This worked well for us. It may also depend on how far away your son is and whether he has a car on campus. DD flew home several times a year, but I bought the tickets.

This worked great for her freshman year, but we may try something different this fall.


Molly--

The whole deal is this: he need some money for day to day expenses. Is there another way to do this that makes more sense?

How about a checking account with a debit/check card and online banking access?

Preferably a national one (or state-wide if you are in IL, as well) so you can make deposits and he can make deposits.

The college (University of Illinois, Champaing-Urbana) has even sent some info about TCF bank located on the campus.


Good school. My SIL got her Master's there.

Definitely talk with him about how credit cards work! This will be far more important than where he gets a credit card or what kind it is. Keep in mind that at age 18, he's legally an adult and can get as many credit cards in his own name as he likes, and even if he's got a card as an authorized user on your account, that's not necessarily going to stop him from acquiring more. As you've already seen, there are plenty of companies that would like to offer him one.

bingocards is right on the money in his post. Your son is going to make his own mistakes, but if you provide GOOD information and support rather than control, they may not be as grievous as they could be. Also, there *is* something to be said about getting credit in your own name while you're in college-- paradoxically, it's about the easiest time in your life to get it, and if you use the credit well, it can be a huge benefit down the road.

Bankrate.com has a lot of good information on college students and credit cards-- might be worthwhile for you to take a look and have your son read there too.

Well, my boyfriend and I were freshmen last year and we both signed up for cards. We read all the fine print, don't carry balances, get rewards/cash back, and are very pleased with this project. :)

He first got the amex blue for students, but then decided he wanted the amex clear, and got that, too.

I got the amex blue cash, which I absolutely adore, but I also got the sharebuilder platinum visa--cuz amex isn't accepted everywhere, and I wanted to have a backup for emergencies.

Our decision to apply for cards was completely on a whim, but we weren't stupid about it. We studied up for a good hour (lol) on cardratings.com, the Fool, and msn Money before applying online. We went for Amex because it had a reputation, but because we did some homework, we also had a good idea of what wanted and didn't want.

-no annual fee
-we definitely wanted cash back/rewards (why not?!)
-preferably no expiration date on rewards (Sharebuilder Visa is 24 mos., but I'm careful)
-no CapitalOne, they don't fairly report your credit!

We didn't really care about interest rates, we never planned on carrying balances. We do charge just about everything we buy, and so we've been racking up some very sweet benefits! And our credit scores are awesome. We didn't even need our parents to co-sign our apartment lease, we can vouch for ourselves. :D

My parents were all proud when I told them about my card, I've never been irresponsible with my money--but my boyfriend's mom freaked out. Probably a reasonable reaction, considering she's got over $20k in credit card debt.

Sorry for writing a storybook here, I'm still feeling proud of myself. :)

But really, make sure your kid knows what a credit report is, why it's important to keep it gorgeous. If he understands that, I don't see why there should be any problems. We're just 19 and 20, but definitely old enough to appreciate the risks of being irresponsible with credit.

My son will be going away to college in August.
He is 18. Just graduated from High School yesterday.
He is a responsible kid.
I am thinking of adding his name to the credit card account with my wife and I.Then, he would have his own card, but all 3 of us would be on the account.
I am asking if others have done this and if it is a good idea.
I trust him, but my only fear is that he will lose the card.

The whole deal is this: he need some money for day to day expenses. Is there another way to do this that makes more sense?

I gues we could give him a few hundred dollars cash we he leaves, and maybe wire him some cash every couple of months.

I just don't know the best way to handle this money situation. - bigdan195 | Date: 5/27/07 7:53 PM | Number: 253666

The best way to handle the situation is for your son to get his own credit card. That way he will build his own credit history.

Kahuna,CFA

The best way to handle the situation is for your son to get his own credit card. That way he will build his own credit history.

RIght, make sure he knows how to get his credit reports online, too!