Three things you must tell your college freshman!

College students across the country are packing up the family van and heading out to set up their first dorm rooms. Along with important lessons like how to do laundry and putting together a loft bed, every parent should pass on these three quick credit lessons to their new college freshmen:

1. Credit cards are for emergencies only.
If you decide to give your college student a credit card (and I recommend that you wait) be sure to pound it into their head that it is for emergency use only. Normal adults can use credit cards for non-emergencies...but this is because they have something called an "income." College students have plenty of pressure to spend, but, with no income, they should stay as far away from credit cards as possible. The plan is to graduate with a degree, not crippling credit card debt. The best way to safely give them access to emergency credit is to set them up as an authorized user on one of your cards. This way, you'll receive the bill for the amount they've spent and can dole out reprimands accordingly.

2. Avoid on-campus credit offers like the plague.
Credit card issuers are a staple on modern campuses. Offering free t-shirts, free pizza, etc in exchange for filing out a simple credit card application may seem like a good deal to a college student but can have a long lasting negative impact. Every credit card a student applies for causes a damaging "hard inquiry" to be reported to their credit reports. And each card you open (even if you close it immediately) puts a record on your credit report for 7 years. Advise your college freshmen to not even make eye contact with these on-campus creditors. Instead, they should shop around online if they want to open a credit card.

3. There will be hell to pay if you use credit irresponsibly.
It can be easy to downplay the impact of credit card late payments in college, but every student should know that their credit behavior now will have a major impact on them for the next 7 to 10 years. One 90-day late payment on a credit card during your freshman year could come back to bite you when you are trying to buy a car or a house, get insurance or apply for a job after graduation. It is especially important for students to understand how collection accounts could also damage their credit. That one unpaid parking ticket or video store late fee could plague your finances for the next decade.

With a little understanding of the consequences and some support from their parents, most college students will be able to make smart credit decisions. What credit lessons did you learn in college? Share your stories in the comments section below.

Comments

[The DEBTective]

I got an even better idea, babe. Don't let your college kid get a credit card at all. The only thing worse than an emergency is being in debt over an emergency. I should know. College kids have committed suicide over being in the hole with credit card debt. Stay away from them at all costs.

[Emily Davidson]

I agree! I didn't open my first credit card until after graduation. It was a great move on my parent's part.

[ATL]

My dad let me have a credit card under his account at 17 so that I can start learning how to manage my credit wisely. Wrong! Even though I had a moderate income, I kept spending and my estimations went overboard. At first, I thought that I had enough to pay the monthly bill, but when it comes to buying furniture for my room (which is expensive and adds up), I jumped to the thought that I had already paid last month's bill already and I will be okay. It turns out that I missed the first payment so my Intro 0% APR for 12 months vanished and I was left with the snobby 17% APR. Back then, I didn't know how Finance Charges were calculated and what the REAL definition of Intro 0% APR was so my assumptions got me into debt. By the end of my summer, I had $1200 in debt and even though I had just as much to pay for it, fortunately for me my dad paid for it as soon as he found out. I'm so thankful to this day that none of that counts! In my senior year, I took a MONEY MANAGEMENT class and it really educated me to understand the technical terms involving credit. A couple months after I turned 18, I decided that I'm ready to take the final chance with credit and it's been great for me! I haven't missed any payments and my 0% Intro APR is still in good standing.