Credit Cards for Starving Students
A Credit Article Contributed by Mark Mcclelland
Are Credit Cards for Students a Good Idea
Your son or daughter just pulled out of the driveway, a new minted freshman student at the state university, with a gleaming new credit card in their purse or wallet... and you're bursting with pride while simultaneously shuddering with trepidation. Not only are they leaving the nest, off to make their way in the world, but they've got also got a credit line - underwritten by you - that could send you to the poor house if they aren't careful.
But even if they are careful, what happens if another student gets hold of the card and he and his buddies goes on a shopping spree. These might be just a few of the thoughts running through you mind as you say your goodbye's and watch them drive away.
Credits Cards for All Types of Students
But underwriting your son's or daughter's student credit card need not give you a case of the willies. A number of options exist that can limit your liability. Some of these are provided by the credit card issuers themselves, and others are available if you know what kind of student cards are available and choose on that fits your needs.
As you probably already know, the credit card issuers themselves provide protection against fraudulent use of your son's or daughter's credit card... as long as you or the student spot the abuse early and report it immediately to the card issuer. But there are also a number of credit cards that are perfect for limiting your exposure to your students temporary lapse of good judgment.
Actions You Can Take to Limit the Potential for Abuse of Your Student's Credit Card
As you are well aware, developing and maintaining good credit sometimes requires a good bit of self control, something we hope our sons and daughters have, but... well, it's a trait they don't necessarily always exhibit an abundance of. So, what to do? The fact is that we can't completely eliminate our exposure, but we can limit it. While most credit cards are based on the use of unsecured credit, there are some type of cards that are based on secured or limited credit.
One good option is to give your son or daughter a debit card rather than a credit card. A debit card gives you direct access to the funds in your bank accounts, either checking or savings, and these cards are accepted wherever the logo imprinted on the card (like, MasterCard or VISA) is displayed. However, since this type of card doesn't involve a loan like a credit card does, they can't be used to establish a credit history.
On the other hand, they do limit your liability to the funds available in the bank account(s) associated with the card. There are other good options as well, like pre-paid credit cards. These cards can also be used wherever the imprinted logo is displayed, but rather than providing direct access to the funds available in your bank account, they are "pre-loaded", like a gift card, with whatever amount of money you specify.
The pre-loaded funds can then be used you student sees fit, but they can't spend more than is currently available on the card. And that may not be such a bad thing.... an ounce of prevention is a whole lot better than a pound of cure.
