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Help your high school and college-age children become responsible credit consumers.
You may have had your first experience with credit as a college student. You probably know about the incredible volume of credit card offers available to students. Did you wonder why banks and retail stores offer credit to students who are living on a fixed income, sometimes without a regular job? Banks and retailers are looking for new business, and students are prime targets. Creditors know two important things about offering credit to high school and college students:
The student will likely be a customer for life.
The student's parents will often pay the balance if the student falls behind.
If your children are going to have their own credit cards, it's a good idea for them to establish a good credit history from the beginning. As the parents of a teenager, you have an opportunity to teach your child how to be a responsible credit consumer.
Discuss why it's important to establish and maintain good credit. Your children are setting the stage for their long-term financial well-being.
Explore the different types of credit cards. Bankcards are accepted wherever the VISA, MasterCard, American Express, or Discover logos are displayed, while department store cards can only be used in one place.
Explain how credit card interest is calculated. Your children may not realize that there is a charge to use a credit card. See the CareOne Credit Knowledge Library for related articles about credit card interest and fees.
Teach your children how to create and maintain a budget. Start by identifying total income and expenses:
Income – Money from parents, part-time job, financial aid, etc.
Expenses – Meals, clothing, entertainment, books, etc.
Stress the importance of paying bills on time. Late payments become part of their credit record.
Share your experience with using credit. Your children probably see you use credit cards to make purchases, but they may not know anything about paying the bill each month. Personal examples often help someone else learn. For a guide to obtaining credit that is aimed at young people, see the U.S. Federal Trade Commission booklet Getting Credit.
Remember that when your children reach the age of 18, they can apply for credit without your permission. Knowing they will be faced with important credit decisions when they get to college can help you focus on an important discussion with them now. Why not use this time to help them start off on the right foot?
It's easy for students to get caught in the credit card trap. Understanding credit will help you become a good credit consumer and set the stage for your future credit health.
Regardless of the amount of debt you are in, debt often brings about feelings of anxiety, fear, frustration, and sometimes shame. While your fears and feelings are valid, it's important to overcome these emotions, pull yourself together, and get on the right track to paying off your credit card debt. Credit cards can be a great tool in establishing or rebuilding credit, but are only valuable when used responsibly.
We are starting to see a trend today; people are opening up about their financial situation, including debt. While once a taboo topic many are looking to share their story in an effort to help others, as well as, themselves get back on track financially speaking.
While many moms and dads often give advice to their teenage children about school, sports, and clothes, very few feel comfortable educating them about finances. But, parents are the best source for teaching teens about money.
For many prospective students, the rising costs of higher education are a daunting prospect. Check out this article for strategies you can follow to help minimize the burden.
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