Visa Student Credit Cards, Are They a Good Idea?
This question has been asked as long as credit cards have been around. The answer will be different according to each person you ask. The key to answering the question of getting a Visa card for your student is best answered by knowing your student, knowing your own credit situation, knowing your lenders, and making smart financial decisions.
First, you have to know your student well if you are going to make a good decision about having a Visa card. Does your student have a job? Is he responsible for the responsibility you have given him so far? Does he make good decisions with his own money? Are you willing to hold him accountable?
All these questions need to be answered before you dive into the world of student credit.
When I was a college student, my parents got me a Visa card to help me with emergency expenses since they were 2 hours away. The biggest problem I faced was that I thought the card was a free ticket to anything I wanted with no consequences. I charged every meal I ate out because I didn't want to burn up my cash allowance. I charged clothes when I wanted them. I charged gas and food from the convenience store. I had no understanding of what things cost when you charge them because nobody ever explained that to me.
You see I was responsible for paying my own credit card bill, and I could always keep up with the minimum payment, so nobody else knew I was building a mountain of credit card debt. I was building up a lifestyle I couldn't afford, and nobody could tell me no. I could just charge it. It was a dangerous way to live.
Now that I am raising my own kids, I have learned from my mistakes. It took me years to climb out of the whole I dug for myself by living on credit. But I did it, and I learned how to handle my credit responsibility, and I am teaching my kids a little differently.
You might think I would say "No student Visa!" You would be wrong. I believe in giving kids a credit card. I believe more in the parent's responsibility to monitor and issue consequences until a student learns and demonstrates a responsibility of his own.
In today's technological world, there is no reason parents cannot keep up with their children's spending habits. Checking account balances, past due amounts, and payment histories are all possible now on the internet. If you are going to get your student a Visa card, sign for it, and check on it. Don't be deceptive. Tell your student what you are doing. If he doesn't like it, offer to close the account.
Chances are, your child will have a little difficulty obtaining a Visa on his own. Believe it or not, that is a good thing. Sign for your child's first Visa. If your name is on the account and you are responsible for it, you can keep up with the payment record and balance. Catch problems as they arise and help your student make adjustments for how to keep up with his account.
Another benefit to being a cosigner on your student's account is that you can show him what each purchase costs if he doesn't pay it off before the interest accrues. Do the math and watch his eyes bug out as the seemingly small purchase grows each time he doesn't pay off the balance. You can also show him how quickly the balance grows and how high the interest goes if he misses a payment or makes one even one day late.
So you fear your child will take the card for granted and just charge everything leaving you holding the bill? Close the account. Immediately. If your child is going to try to take you for granted, cut off the extra funding and put him back on a cash allowance. Someday, some maturity will kick in and he'll be ready to try again. This is not an easy lesson to learn, especially if your student has never had any financial responsibility or understanding.
You might consider a card with a prepaid limit. This makes the boundaries very clear. If it's not there, you can't spend it. Once you decide to move to a revolving credit Visa card, be sure to start with a very low limit that will only allow purchases that truly are emergencies. If they abuse it, close it! If they prove responsible with the low amount, increase it a little at a time. A windfall of credit at once is a great temptation. Even if the bank is impressed and wants to loan them more money, open the purse strings a little at a time.
One final note. Even if you are the cosigner on your student's Visa account, make him responsible for paying the bill. Don't just show it to him when it comes. Send it to his address, and make sure he knows it is his responsibility to pay it off each month, on time.
Not all kids take well to being overseen by mom and dad, but it is worth the time, effort, and headache to train your student how to handle his new Visa account. He will learn fiscal responsibility, and he will learn to work for what he wants without feeling entitled because he can charge it!
