Helping Your College Student understand Credit
Does your college student understand how credit works? Here are a few tips to share with your child.
Nashville, Ark. – Parents who have sent their child off to college for the first time this year are just now realizing the cost of paying for that college education. Hopefully, you have prepared for the cost of tuition, books, room and board and the numerous other necessities you will incur during the next few years. However, you may have overlooked a very important aspect of transitioning your child from childhood to adulthood – an understanding of how credit works.
The first step in managing personal finances is to master the basic checking/debit account. Here are a few tips to share with your child.
- Look for a bank or credit union that charges no monthly usage fee, requires no minimum balance and has conveniently located ATMs so you don’t spend a fortune on ATM charges.
- Teach your child how to enter all transactions in a check register. You may need to remind them to post everything and how to verify deposits, checks, debit purchases and any automatic payments.
- It goes without saying, avoid writing checks or making debit card transactions unless the money is in the bank and will cover the transaction.
Now, what about credit cards? A good way to build good credit is to demonstrate responsible credit card use. People under the age of 21 cannot open a credit card account on their own without a parent cosigning unless they can prove they have sufficient income to repay the debt. So how can a parent help their child establish good credit? Here are a couple of options:
- Make them an authorized user on one of your accounts. They will get their own card and you can restrict the amount they’re able to charge. Authorized users are not legally responsible to pay balances owed. You as the parent and owner of the card will be required to make the payments, so use this option with caution.
- Add them as a joint account holder to a new or existing account – preferably, one with a small credit limit. Joint account holders are equally responsible for paying off the account.
- Just remember, any account activity, good or bad, goes on both of your credit reports, so careful account monitoring is super important!
Some young adults just aren’t ready to handle the financial responsibilities of using a credit card. You, as the parent, can determine when they may be ready. To help your child get ready for credit, you might consider trying this:
- A secured credit card, where users can charge up to the amount deposited to open the account. Purchases are charged against the account’s revolving credit limit. As they pay off the balance the available credit rises, just like a regular credit card. After a period of on-time payments, ask the lender to convert it to an unsecured card, or to at least add an unsecured amount to the account.
- A prepaid debit card, where you load the card with money in advance and they use the card for purchases or ATM withdrawals. You monitor account activity online or by phone.
- Be sure to read the fine print. Fees and restrictions usually apply to these types of accounts, so shop around.
Establishing good credit is important. At some time in the near future, your child will begin making major purchases such as a car, a house payment, etc. Help them now to prepare for future financial decisions.
For more information on credit or budgeting, contact the Howard County Extension Service at 870-845-7517 or visit our office located on the second floor of the courthouse. The Cooperative Extension Service is part of the University of Arkansas Division of Agriculture.
Recipe of the Week
Need a quick after school snack for hungry students? Individual pizzas are a great choice. Students can make them themselves. Let them choose the toppings they prefer. Great snack or meal idea for college or Kindergarten students.
4 slices whole-wheat bread or 2 English muffins, halved
½ cup low-sodium spaghetti sauce
½ cup pineapple tidbits in own juice, drained
½ cup lean diced ham
¼ cup reduced-fat mozzarella cheese, shredded
Toast bread or muffin until very lightly browned. Preheat oven to 350⁰F. Place toasted bread or muffin on a baking sheet.
Spread ½ of the spaghetti sauce onto each slice of bread or muffin half. Place ½ of the pineapple tidbits and ½ of the diced ham on top of the spaghetti sauce. Sprinkle 2 tablespoons of cheese on top of pineapple. Bake at 350 degrees for 4-6 minutes or until cheese melts and bread or muffins are thoroughly heated.
Nutrition Information Per Serving: 270 calories, 6g fat, 12g Protein, 40g carbohydrate, 9g fiber, 390mg sodium. Excellent source of vitamin C. Good source of calcium and iron.
By Jean Ince
County Extension Agent - Staff Chair
The Cooperative Extension Service
U of A System Division of Agriculture
Media Contact: Jean Ince
County Extension Agent - Staff Chair
U of A Division of Agriculture
Cooperative Extension Service
421 N. Main St, Nashville AR 71852
The Arkansas Cooperative Extension Service is an equal opportunity/equal access/affirmative
action institution. If you require a reasonable accommodation to participate or need
materials in another format, please contact your County Extension office (or other
appropriate office) as soon as possible. Dial 711 for Arkansas Relay.
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