Parents go through a lot of emotion and stresses during the freshman year of their child’s college career. It may even take a bigger toll on the parents than the student. Students have probably been waiting a long time to get out of the house and out from under the wings of their parents. Parents, on the other hand, still feel responsible for assisting the child during this period of transition and often find themselves still financing the child’s life.
Financial Support Options
So what happens when a student is out of the nest and needs financial support? Many parents object to a first time student working, until they become more acclimated with college life and academics. While a joint bank account and cash on hand is the avenue many people take, others rely on credit cards for backup. Parents can add their children as authorized users on their own account. Students can also apply for their own card. Nowadays, there are more and more options for college students looking for a credit card. There are all types of rewards programs and cash back bonus plans that are advantageous to a college student. Parents and students should look carefully at all of the advantages and disadvantages of each student credit card before opening just any account.
To Sign or Not to Sign
When applying for a credit card on their own, a student may not meet the criteria required to open an account without the help of a parent. Students who do not have a history of any kid of credit may need mom or dad to co-sign on the account, therefore making the parent just as responsible for payments. Parents need to consider what will be affected by this agreement as far as their own credit is concerned. It only takes one missed payment to screw up otherwise excellent credit for both parties. Co-signers have a responsibility to lay down the rules and teach their young adults about the consequences of credit and a lesson in budgeting is also recommended. Parents have an advantage now because the card can be monitored online at any time. In the past, a credit card statement came only once a month, often when it was too late to know there was a problem with misspending. Parents need to understand their credit is at risk and a clear explanation of that should be given to the student. Keep in mind, also, credit cards today do not always require a co-signer in order to open an account. Credit card companies have become more lenient in recent years and in a roundabout way, they assume many parents will take responsibility for a student’s debt, whether or not they are legally bound to do so.
If you have been considering co-signing a credit card account for your kids, make sure both you and your child understand the liabilities involved. As a co-signer, you are both responsible for the bills, the spending, and the lessons of financial responsibility.
Guest post from Tisha Kulak, a writer for Creditorweb.com, where she writes about credit card offers, student credit cards and responsible credit card use.