Parents' Voices of Experience
Advising students on finances, credit cards,
and spending
Every family has its
own financial reality, and different families have different approaches
to teaching their children about finances. Most parents, however,
believe in the importance of talking with their students about finances,
credit cards, and spending before the student begins college. A number
of parents have shared their experiences and advice on this topic.
Note: University policy prohibits sales and solicitation
on campus unless a student group sponsors the vendor and sales are
associated with a campus event. Nevertheless, credit card vendors
do set up tables on campus without permission. Credit card vendors
provide incentives—t-shirts, phone cards, fast-food coupons—that
are particularly tempting to students. When campus authorities see
vendors, they instruct the vendors to leave. This is most likely
to be a problem early in the fall and again in spring.
We have spoken many times with our daughter
regarding the use of credit cards and have even advised her not to
carry any credit cards with her so that she wouldn't be able to make
any snap decisions. We also advised her never to put anything on a
credit card if she didn't already have the money to pay for it. We
also discouraged her from ever having more than one credit card. L&AD
As a parent, I don't think financial discussions can
be overdone. Out of my seven daughters, three have maxed out credit
cards at one time or another. It took that situation to make them
understand what we tried to teach them. The other four are a little
more conservative on what they use their credit cards for and how
often. RP
My husband and I told our son that we were going to
help him as much as we could, but he could not use a credit card.
We have a credit union, and if he is in trouble, we can send him
money fast. We are only three hours from the University. GN
We discussed financial issues at length before our
daughter left for school. We have always had to live within a budget,
and we tried to be honest with our daughter about the times when
we allowed ourselves to be overindulgent and the consequences of
catching up. PS
I tried to demonstrate good financial management for
my student in the handling of my own finances. We discussed his
need or not for a credit card. He chose not to have one. We discussed
other money management and keeping track of spending and bank balances.
I provided a format for him to use for tracking his expenses and
balances remaining in his account. SH
We discussed finances periodically throughout the
years as the kids were growing up, telling them how easy it is to
get in over your head and to be tied to heavy payments for things
you bought years ago. We especially spoke about it in the last year
or two of high school. KR
I am just awed at the number of credit card offers
out there for young people. Without an application, my oldest daughter
received three cards before she was even out of high school. We
have given our daughter one under our name only because we know
she does not have the income to support her own card. She was given
it for emergency use only. I am comforted to know our daughter has
it, as right now she is up there with transmission trouble on our
car. It will be our responsibility to get it paid for, not hers.
She needs to concentrate on her studies; not worry about paying
those kind of bills. CT
We discussed financial responsibility with our daughter
before she started the U of M this fall. We got her first credit
card with only a $500 limit and plan to keep it at that. We made
it clear she was responsible for certain items, such as entertainment,
some clothing, etc., and made clear what we would pay for. To this
point, she is doing pretty well. MH
Our son has had a credit card since he was 16 years
old. He obtained it without any input or co-signing from us (which
surprised my wife and me greatly!). It had a limit of $300. He immediately
charged to the limit, then had to get it paid back with the money
that he earned from his lawn care business and his restaurant job.
The learning experience was absolutely priceless! When I saw his
statement, I would point out to him the interest he was paying and
remind him of how many hours he was going to have to work just to
pay that, let alone the principal. After paying it off, he has never
(to the best of our knowledge) charged more than he has been able
to pay in full each month. WA
Discussing financial responsibility with a freshman
is very important. Like how much spending money is available on
a weekly basis. We signed for our son's credit card and explained
the parameters of its use. He has followed those guidelines. Consequences
of improper use of this credit card would result in cancellation
of the card. GD
My daughter has been on my credit card since she was
16. I did this intentionally so that I could monitor her usage of
it. We made it a policy that if she charged anything, she would
pay me before the credit bill came. As a result, I think she has
learned how to use a card responsibly. She does not have any other
cards at this point but has been talking of getting one in her own
name. MZ
We have had a lot of discussion about the good and
bad of credit. My daughter has had cards since being a junior in
high school. She sees how we handle credit, and she knows that there
is no such thing as a free lunch. DB
A credit card was a plus for both of our U of M students.
We introduced them to the concept their senior year in high school,
so we felt comfortable that they understood it was not unlimited
cash. Both children have used them very responsibly, paying their
total bill each month. Our son signed up for several cards at a
freshman orientation fair so that he could get free t-shirts. Fortunately,
he used his home address so receive the solicitations (phone and
mail) about every quarter, and he isn't bothered or tempted to have
multiple cards. JJ
With two children, the older one is in debt thinking we would take
care of his problem. Our daughter attending U of M has learned from
his mistakes and is responsible and very money conscious. We discussed
finances with our first child, but he didn't listen. He believes he
was mature enough to make that decision (to spend money) and at the
time we did not encourage him to have a card. Our daughter weighed
the advantages, discussed with us what it would be used for—books,
supplies, and emergency purposes—and that she would be responsible
in paying it off monthly. She has had to show us her bill on a monthly
basis in order for her to continue to receive help with paying for
college. So far, so good. VD
We had quite a bit of discussion before our daughter
started this fall. The credit card is in her name, we receive the
bill and pay it, she checks with us before buying something on it.
She has her checking account on campus that maintains her privacy
for spending, and she has a certain amount of money in that account
to last each semester. This is a start; I am sure by the time we
get to our younger daughters in four years, we might do something
different. Each student is different in their approach to money,
and that is the issue—know your child. NO
I was horrified when I found out that my son, who
was a freshman in college with no income, could go to school and
be solicited by credit card companies. My son applied for and received
six different credit cards with varying limits, all because he wanted
the T-shirt, sunglasses, long-distance minutes—whatever they
used to draw him in. My son used his home address, so I started
receiving all these credit cards and was shocked that they would
give these someone who had no income! When we tried to cancel the
cards, we got lectured from the credit card companies on how it
was bad for his credit to open these accounts only to cancel them
without any activity on them. I am happy to say he is a junior and
debt-free, he works in the summer and saves to pay for his entertainment
during the school year, and that is the way it should be. No college
student needs a credit card. SA
My daughter was victimized by a company that had their
processing headquarters in Iowa but their bill payment address was
in California. Their customer service and charter were in Delaware.
They claimed they didn't receive her payments on time, even when
she mailed the payment on the same day she received the bill. Unfortunately,
I didn't explain to her what types of scams could be out there.
I didn't really know too much about the scam she was hit with. We
did discuss the dangers of credit card debt and how it can quickly
overwhelm a person. KK
Money management doesn't begin at 18 or as a freshman.
We discussed money management with our children from about the age
of six, and it appears to have worked. BW
We gave each of our boys a checking account when they
got their drivers licenses, as well as a credit card that we paid.
The card could not be used without our approval. Failure to meet
our terms resulted in the card being taken away (which we did with
one of the three boys). We taught them how to use their checking
account. That gave us two years while they were at home for us to
discuss money management. SS
We offered fundamental advice regarding cards, e.g.,
get one to begin establishing a credit rating; be advised of the
higher interest rate, late payment fees, and other penalties attendant
with a poor or unestablished credit rating; pay off credit card
debt every month; don't incur more debt than you can satisfy monthly;
look at using something like a software program to manage your personal
budget. JR
We were greatly disturbed last week when our son received
two new credit cards, one rejection, and one acceptance that needed
more information. When we asked him about this flurry of activity,
he said he did it just to get the free t-shirts they offered him
as he was walking on campus. We told him we didn't want him to have
any credit cards, and he agreed because of two friends he has. One
has struggled with credit card debt because of the ease of purchases
ever since starting college. The other kept telling his friends
not to let him charge another thing because he couldn't handle it.
He finally had a store clerk cut up his card for him. I don't believe
a college student is in a very good position to have credit cards,
as their expenses are so high and income pretty menial. Getting
in debt comes so fast and easy; getting out is a long process. We
are dead against his having a credit card. BB
I discussed finances with both of my children, but
probably not enough. Some things, however, just need to be learned
by experience. I believe the problems my son had with credit card
debt made an impression on my daughter. She is three years younger
than he is and realized what he had done. She has been much more
responsible with her credit cards than he ever was. PS
Imagine what you would be worth today if someone had
shared with you at 18 years old the power of an IRA and time values
of money! RS
My daughter began getting applications for credit
cards when she was still a senior in high school and only 17 years
old. Since then we get at least one credit card application a month.
I feel as a parent, it is my responsibility to teach my son or daughter
how to use a credit card responsibly. She has our credit card for
any emergencies, and she must inform us of the emergency expenditure.
As she matures and is at the end of her college experience (she
is a sophomore currently), I'm sure we will advise her to get a
card with a very low limit to begin with. JC
I prepare income tax returns as a profession, and
using a credit card can give parents a way to keep track of expenses
for the Hope Credit or the Lifetime Learning Credit. I have always
believed my role as a parent was to teach and guide my child, not
to control. I taught my children about credit cards and checking
accounts when they were fifteen. I never put a penny of my money
into their accounts, it was always from their earning, and each
month we discussed how much of the credit card bill they were responsible
for. The greatest lesson they learned was when the $26 overdraft
fee was assessed against them because of $1.56 yogurt purchase they
made without enough money in their account, and then realized that
their parents were not going to pay the fee. It took them about
four hours of work at $7 an hour to pay for it. DY
Freshmen have enough to deal with, and students in
general incur enough debt just going to college without having credit
card debt, too. I discussed credit cards with my daughter and encouraged
her not to get one. So far, so good. I think she realizes she can
be too impulsive. Money goes through her like a sieve; she's a work
in progress. BH
My son had a credit card that was an extension of
our account. It was an easy way to buy gas and essential when he
was in Europe. However, I paid the bill, so he didn't learn about
paying for what you spend. JB
We raised our son to be good at handling his own money—something
he comes naturally to. He worked for us on our farm his growing-up
years and earned his spending money and then some. He has totally
dealt with his college expenses up to this time—he is a freshman.
Parents must give their kids experience in money management all
along the way. They need to make mistakes while they are still home,
so they can be given guidance then. Once they leave home, it is
pretty hard to really help them. L&KF
We discussed finances at length with our freshman. She was informed
that if she chooses to be irresponsible with her finances, then
she will relinquish the privilege of attending college. She was
also informed that she was not allowed to have a credit card, she
only has a debit card for her checking account.
GB
My daughter definitely needs a credit card. She lives off campus,
has a car, pays her own living expenses, etc. She has lived off
campus since the beginning of her junior year, and thinking back,
I would say that was about the time that she began to need a credit
card. My son lives in the dorms. He is partially responsible for
his school-related costs, but we paid those early in the semester.
He doesn't have a car on campus and shouldn't encounter any emergencies
where he really needs money. I don't think he needs a credit card
at this point. PA
We did discuss credit cards, but in retrospect should have allowed
him to use one before going to college as an educational device—learning
that using a credit card for purchases is a "real" expenditure that
is simply postponed or delayed in terms of payment. Also, that falling
to pay off balances each month can quickly put one into a downward
spiral of debt. SE
Credit cards for college students are very convenient. They allow
students access to many automated machines on campus. It allows
transfer of funds easily. Responsible use of credit cards is up
to the family to monitor. JA
We have discussed financial issues quite in depth with our student,
and she has an understanding of her financial responsibilities and
knows that if she should opt to get a credit card, she is the one
responsible for its proper use. We have discussed things such as
no-fee cards, billing cycles, buying on a card only what you know
you will have resources to pay for when the bill comes due, and
the value of establishing a good credit rating.
PE
My son does have a card. He used it for traveling and emergencies
only. As early as his junior year in high school, our student began
receiving offers in the mail. That is the time to discuss the pros
and cons with children. I think it is important for teens to establish
good credit card practices to insure full credit privileges when
they need to buy cars and houses. It is too easy to apply for many
cards with special gift offers and ruin a student's credit record
at age 18! It is an issue just like drinking! Be responsible is
our main message to our son. Make good choices. Think things through.
G
We did provide our sons with a gasoline credit card so they would
not be "stuck," unable to purchase gasoline (but normally they would
use cash) or in the event of simple repairs. Our youngest (high
school) went to Europe with a limited daily withdrawal bank card,
which he used responsibly—the ATMs are a good method of getting
cash as needed overseas. PH |
