Student Credit Card: Good idea or potentially costly mistake?
One of the biggest challenges when you send an eighteen year old child off to college for the first time is helping them to manage their money (and yours if you’re footing any part of the bill).
Often, the college experience is the first real experience that your child will have being completely and totally on their own, and unfortunately, with as many activities that most kids these days participate in, many haven’t actually had the opportunity to hold down a part time job, learn how to keep a checking account, or how to do anything except to ask for money when they need it. But then, suddenly, he or she is graduating high school, and you’re expected to send them off to college, and they’ll magically be able to manage money? Not so much!
So, what is the answer? Open a checking account? Give them a credit card of their own? How about a better option?
Why not send him (or her) off to college with a prepaid or debit card that is attached to an account with only a set amount of funds available?
There are several reasons why this may be your smartest move, but the biggest one is this: Prepaid or Debit cards only have a certain amount of money available to spend. So, your college student will have to learn to budget in order to make the money last for the entire week, month, or even term.
Even better, if he or she happens to lose the card, or it’s stolen, or even if his/her not so honest roommate were to “borrow” the card, there’s only so much money for the thief to spend. So, instead of that person having access to hundreds or even thousands of dollars, you can limit it to whatever amount you agree upon.
And, in the event that you need to, you can easily transfer money to the card without having to link your bank account to it. That way, you’re protecting your own finances.
When you really think about it, doesn’t a prepaid or debit card make the most sense for your college student?