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Credit Card Tips for Your College Student

These do's and don'ts will help young adults keep from racking up debt

Mother and daughter shopping online with credit card, Help Your College Student to Develop Credit Card Smarts (Blend Images/Getty Images)

Create realistic spending limits and urge your child to stick to those limits. — Blend Images/Getty Images

En español | If you have a young adult heading off to college, now's the time to make sure your student knows how to manage money on his or her own.

Without proper financial guidance, many young adults develop bad money habits in college — and end up paying a big price for years to come. Similarly, being independent offers kids a good opportunity to learn financial lessons that will serve them throughout life.

Share these credit card do's and don'ts with your college-bound son or daughter.

1. DO consider making your student an authorized user of your card

Despite recent federal laws restricting credit card marketing on campuses, students can still be inundated by offers from banks and credit card companies. And it can be tempting for a young adult to sign up for a card — or even several cards — to cover personal and educational expenses.

It's better to encourage your child to turn down those offers, and instead designate him as an authorized user on your credit card. This will allow you to monitor his spending and keep him accountable for any purchases he makes using that card.

2. DO have your college student apply for a debit card

If you don't want your child linked to your credit accounts or you're concerned about his money-management skills, suggest that he get a debit card that he can use to pay his bills.

It's a good way to help students effectively manage their money without worrying about the hassles of writing checks for day-to-day purchases. Still, they do need to keep track of how they use the card, either by keeping a running total or regularly reviewing their online statements. Plus, debit card users can set up email alerts as notifications when their balance runs low.

3. DO consider the benefits of secured cards

If you want your college student to establish a credit history during her college years, an alternative way for her to achieve this goal is by applying for a secured credit card. She can manage that account on her own, or you can serve as a joint account holder.

Just like traditional unsecured credit cards, secured credit cards help people (young or older) build credit by reporting one's payment history to the credit bureaus. But these cards differ from regular, unsecured cards in one significant way.

Secured cards require a security deposit, which then becomes the credit line. For example, if you put $500 on deposit with a bank, that bank can provide you (or your child) with a secured card that has a $500 credit limit.

Parents who are co-users of their child's secured card would have access to that account but could choose not to use it.

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