Monday, July 21, 2008

Teaching Responsible Credit Card Use

It's an unfortunate fact that most students never get formal lessons in managing their credit and debt. For many immature people, their first brushwood with being responsible credit card users won't come up till they are in college - away from home and the counsel of ma and dad. The minute they step on campus, new college students will be wooed by major credit card companies, all of them eager to set up themselves as 'the first card in your wallet'.

If your kid will be going off to college in the fall, one of the best things you can make for him or her is to get them started on the right ft to handling credit responsibly. Needless to say, illustration is the best manner to teach. The more than than responsibly you manage your ain credit card use, the more likely it is that they'll absorb your attitudes toward the usage of credit cards.

Beyond that, though, one of the easiest ways to learn responsible credit card usage is to cosign an application for one of the credit cards that is especially designed for student usage - and make it before they're off on their own. Each major credit card line characteristics at least one credit card that have low credit bounds ($500 to $1000), no annual fee and a moderate APR.

Make a large deal about applying for the credit card. Explain to them that each credit card application they fill up out volition be noted on their credit report - high school students especially understand the conception of a 'permanent record' - and that the more than credit cards they apply for, the worse their 'permanent record' volition become. That way, when they hit campus, they'll be forewarned against the countless credit card companies telling them 'it's no large deal'.

Show them how to compare credit cards and figure out what credit will actually cost them. If you're not certain of it yourself, see our articles about Annual Percentage Rate and how to calculate out the cost of a credit card. Brand certain that they understand what a 'late payment' is, and how it will impact the charges on their credit card. When they understand that making a payment late volition add $29 to their measure this month, AND addition their APR so that every measure from now on volition be higher, they're far more than likely to appreciate the significance of making payments on time.

Finally, before turning them loose with a credit card, take the clip to sit down down with them and work out a loose budget they can follow. Then do a monthly day of the month to sit down down and travel over the credit card measure and credit card gross together. You'll be able to supervise disbursement and assist them work out ways to remain within budget while still paying off their credit card properly.

It's a common apothegm that it takes only 7 years to set up a new habit. Take a few calendar months before your student caputs off to college to assist them set up good, responsible credit card habits. It's a lesson that volition last them the remainder of their lives.

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