Student credit cards can be an awesome way for you to help your student establish, understand and maintain an excellent credit score. But don’t expect that a young person can simply take on the responsibility of a credit card without making some mistakes. Take time to fully explain how student credit cards work, and then stay involved in the process.

It’s bound to happen. Credit card companies offer services to college students all the time. Sometimes, the credit card opportunities come as early as high school. Credit card companies see a nearly blank slate and are ready to be the first to set up a line of credit. Students often see a chance for instant gratification.

As a student, why shouldn’t you take advantage of a credit card? After all, we’re a society that depends greatly on the use of credit. Young people see the adults using credit cards and it seems a natural step. Besides, simply having a credit card doesn’t mean that you have to go in debt.

But it happens so easily.

As an adult, you may think that your student has his or her needs met. He’s clothed, sheltered and fed, and you’re sending checks to supplement his income for books and other necessities. But students are at the edge of adulthood, ready to at least test the water. A credit card is a step in that direction.

The cardholder sees something he or she wants. The credit card is there and before you know it – the item is loaded into the back of a car and headed to the dorm. Or maybe your student decides he can take a couple of friends out for dinner to celebrate the end of the first chemistry chapter. Perhaps it’s something truly legitimate – needed car repairs and a reluctance to call home for money.

Regardless of what the purchases are, credit card charges can add up quickly. Therein lies the first problem with student credit cards – first-time cardholders typically don’t realize how quickly the balances accrue.

Does that mean that you should keep your student from having a credit card? Unfortunately, you can’t control most aspects of a student’s life, even if that student lives at home during college.

Instead of trying to keep him or her from applying for and accepting a student credit card, take the opportunity to use this as a teaching experience.

First, sit down together and look over some of the credit card companies that offer student credit cards. Go over rates, terms and conditions and choose the one that makes the best financial sense.

Take time to read the fine print and point out some of the gimmicks that credit card companies use to lure you in as a new account holder. Low introductory interest rates that increase dramatically after a short period of time, low interest rates that are offset by high annual fees, and the promise of no interest that only applies to balances of less than thirty days are some of the examples.

Talk about how payments will be made. This might be a good time to help your young adult set up a budget and figure out how to make ends meet overall. This is also a good time to talk about restraint. While almost everyone has wants, a young person is less likely to consider the long term impact of giving in to impulse buys. Challenge your child to take a step back from even small items and carefully consider why he’s about to make the purchase. Encourage him to be able to pay for at least half the cost before he puts it on his credit card.

Understanding credit is a major part of understanding the responsibility of holding a credit card. Anyone is eligible for a free credit report from the three major credit-reporting companies and this might be a good time to get one for your student. Remind him of the things that will be posted on his credit report, including his payment habits for this credit card. While it’s possible to keep the creditors from making a big fuss over a few late payments, that habit can impact the ability to buy other things down the road - a house and a car, for example.

You should also point out that applications for credit are typically noted on credit reports. That really punches holes in that theory that it doesn’t hurt to apply for every credit card offer that comes along because you don’t have to accept the card even if it is approved. Excessive credit applications may even become a reason for being turned down.

Considering the seriousness of credit, you should make a plan as to how you’re going to handle it if your child is unable to make a payment on the credit card. Teaching him a lesson and letting him handle it on his own is one way, but the result is going to be a negative mark on his credit history. It might be best to let him know that you’ll help if he should need it, but you’ll also need to set some ground rules so that he isn’t borrowing from you to pay off debts – a sure precursor for paying off credit cards with other credit cards.

Using a student credit card is a good way for a young person to get started correctly down the road to financial security. As a parent, this is a good opportunity to help your children get off on the right foot.

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