Voices of Experience

Advice from parents on finances, credit cards, and spending

Every family has its own financial reality, and different families have different approaches to teaching their children about finances. Most parents, however, believe in the importance of talking with their students about finances, credit cards, and spending before the student begins college. A number of parents have shared their experiences and advice on this topic.

Note: University policy prohibits sales and solicitation on campus unless a student group sponsors the vendor and sales are associated with a campus event. Nevertheless, credit card vendors do set up tables on campus without permission. Credit card vendors provide incentives—t-shirts, phone cards, fast-food coupons—that are particularly tempting to students. When campus authorities see vendors, they instruct the vendors to leave. This is most likely to be a problem early in the fall and again in spring.

We have spoken many times with our daughter regarding the use of credit cards and have even advised her not to carry any credit cards with her so that she wouldn't be able to make any snap decisions. We also advised her never to put anything on a credit card if she didn't already have the money to pay for it. We also discouraged her from ever having more than one credit card. L&AD

As a parent, I don't think financial discussions can be overdone. Out of my seven daughters, three have maxed out credit cards at one time or another. It took that situation to make them understand what we tried to teach them. The other four are a little more conservative on what they use their credit cards for and how often. RP

My husband and I told our son that we were going to help him as much as we could, but he could not use a credit card. We have a credit union, and if he is in trouble, we can send him money fast. We are only three hours from the University. GN

We discussed financial issues at length before our daughter left for school. We have always had to live within a budget, and we tried to be honest with our daughter about the times when we allowed ourselves to be overindulgent and the consequences of catching up. PS

I tried to demonstrate good financial management for my student in the handling of my own finances. We discussed his need or not for a credit card. He chose not to have one. We discussed other money management and keeping track of spending and bank balances. I provided a format for him to use for tracking his expenses and balances remaining in his account. SH

We discussed finances periodically throughout the years as the kids were growing up, telling them how easy it is to get in over your head and to be tied to heavy payments for things you bought years ago. We especially spoke about it in the last year or two of high school. KR

I am just awed at the number of credit card offers out there for young people. Without an application, my oldest daughter received three cards before she was even out of high school. We have given our daughter one under our name only because we know she does not have the income to support her own card. She was given it for emergency use only. I am comforted to know our daughter has it, as right now she is up there with transmission trouble on our car. It will be our responsibility to get it paid for, not hers. She needs to concentrate on her studies; not worry about paying those kind of bills. CT

We discussed financial responsibility with our daughter before she started the U of M this fall. We got her first credit card with only a $500 limit and plan to keep it at that. We made it clear she was responsible for certain items, such as entertainment, some clothing, etc., and made clear what we would pay for. To this point, she is doing pretty well. MH

Our son has had a credit card since he was 16 years old. He obtained it without any input or co-signing from us (which surprised my wife and me greatly!). It had a limit of $300. He immediately charged to the limit, then had to get it paid back with the money that he earned from his lawn care business and his restaurant job. The learning experience was absolutely priceless! When I saw his statement, I would point out to him the interest he was paying and remind him of how many hours he was going to have to work just to pay that, let alone the principal. After paying it off, he has never (to the best of our knowledge) charged more than he has been able to pay in full each month. WA

Discussing financial responsibility with a freshman is very important. Like how much spending money is available on a weekly basis. We signed for our son's credit card and explained the parameters of its use. He has followed those guidelines. Consequences of improper use of this credit card would result in cancellation of the card. GD

My daughter has been on my credit card since she was 16. I did this intentionally so that I could monitor her usage of it. We made it a policy that if she charged anything, she would pay me before the credit bill came. As a result, I think she has learned how to use a card responsibly. She does not have any other cards at this point but has been talking of getting one in her own name. MZ

We have had a lot of discussion about the good and bad of credit. My daughter has had cards since being a junior in high school. She sees how we handle credit, and she knows that there is no such thing as a free lunch. DB

A credit card was a plus for both of our U of M students. We introduced them to the concept their senior year in high school, so we felt comfortable that they understood it was not unlimited cash. Both children have used them very responsibly, paying their total bill each month. Our son signed up for several cards at a freshman orientation fair so that he could get free t-shirts. Fortunately, he used his home address so receive the solicitations (phone and mail) about every quarter, and he isn't bothered or tempted to have multiple cards. JJ

With two children, the older one is in debt thinking we would take care of his problem. Our daughter attending U of M has learned from his mistakes and is responsible and very money conscious. We discussed finances with our first child, but he didn't listen. He believes he was mature enough to make that decision (to spend money) and at the time we did not encourage him to have a card. Our daughter weighed the advantages, discussed with us what it would be used for—books, supplies, and emergency purposes—and that she would be responsible in paying it off monthly. She has had to show us her bill on a monthly basis in order for her to continue to receive help with paying for college. So far, so good. VD

We had quite a bit of discussion before our daughter started this fall. The credit card is in her name, we receive the bill and pay it, she checks with us before buying something on it. She has her checking account on campus that maintains her privacy for spending, and she has a certain amount of money in that account to last each semester. This is a start; I am sure by the time we get to our younger daughters in four years, we might do something different. Each student is different in their approach to money, and that is the issue—know your child. NO

I was horrified when I found out that my son, who was a freshman in college with no income, could go to school and be solicited by credit card companies. My son applied for and received six different credit cards with varying limits, all because he wanted the T-shirt, sunglasses, long-distance minutes—whatever they used to draw him in. My son used his home address, so I started receiving all these credit cards and was shocked that they would give these someone who had no income! When we tried to cancel the cards, we got lectured from the credit card companies on how it was bad for his credit to open these accounts only to cancel them without any activity on them. I am happy to say he is a junior and debt-free, he works in the summer and saves to pay for his entertainment during the school year, and that is the way it should be. No college student needs a credit card. SA

My daughter was victimized by a company that had their processing headquarters in Iowa but their bill payment address was in California. Their customer service and charter were in Delaware. They claimed they didn't receive her payments on time, even when she mailed the payment on the same day she received the bill. Unfortunately, I didn't explain to her what types of scams could be out there. I didn't really know too much about the scam she was hit with. We did discuss the dangers of credit card debt and how it can quickly overwhelm a person. KK

Money management doesn't begin at 18 or as a freshman. We discussed money management with our children from about the age of six, and it appears to have worked. BW

We gave each of our boys a checking account when they got their drivers licenses, as well as a credit card that we paid. The card could not be used without our approval. Failure to meet our terms resulted in the card being taken away (which we did with one of the three boys). We taught them how to use their checking account. That gave us two years while they were at home for us to discuss money management. SS

We offered fundamental advice regarding cards, e.g., get one to begin establishing a credit rating; be advised of the higher interest rate, late payment fees, and other penalties attendant with a poor or unestablished credit rating; pay off credit card debt every month; don't incur more debt than you can satisfy monthly; look at using something like a software program to manage your personal budget. JR

We were greatly disturbed last week when our son received two new credit cards, one rejection, and one acceptance that needed more information. When we asked him about this flurry of activity, he said he did it just to get the free t-shirts they offered him as he was walking on campus. We told him we didn't want him to have any credit cards, and he agreed because of two friends he has. One has struggled with credit card debt because of the ease of purchases ever since starting college. The other kept telling his friends not to let him charge another thing because he couldn't handle it. He finally had a store clerk cut up his card for him. I don't believe a college student is in a very good position to have credit cards, as their expenses are so high and income pretty menial. Getting in debt comes so fast and easy; getting out is a long process. We are dead against his having a credit card. BB

I discussed finances with both of my children, but probably not enough. Some things, however, just need to be learned by experience. I believe the problems my son had with credit card debt made an impression on my daughter. She is three years younger than he is and realized what he had done. She has been much more responsible with her credit cards than he ever was. PS

Imagine what you would be worth today if someone had shared with you at 18 years old the power of an IRA and time values of money! RS

My daughter began getting applications for credit cards when she was still a senior in high school and only 17 years old. Since then we get at least one credit card application a month. I feel as a parent, it is my responsibility to teach my son or daughter how to use a credit card responsibly. She has our credit card for any emergencies, and she must inform us of the emergency expenditure. As she matures and is at the end of her college experience (she is a sophomore currently), I'm sure we will advise her to get a card with a very low limit to begin with. JC

I prepare income tax returns as a profession, and using a credit card can give parents a way to keep track of expenses for the Hope Credit or the Lifetime Learning Credit. I have always believed my role as a parent was to teach and guide my child, not to control. I taught my children about credit cards and checking accounts when they were fifteen. I never put a penny of my money into their accounts, it was always from their earning, and each month we discussed how much of the credit card bill they were responsible for. The greatest lesson they learned was when the $26 overdraft fee was assessed against them because of $1.56 yogurt purchase they made without enough money in their account, and then realized that their parents were not going to pay the fee. It took them about four hours of work at $7 an hour to pay for it. DY

Freshmen have enough to deal with, and students in general incur enough debt just going to college without having credit card debt, too. I discussed credit cards with my daughter and encouraged her not to get one. So far, so good. I think she realizes she can be too impulsive. Money goes through her like a sieve; she's a work in progress. BH

My son had a credit card that was an extension of our account. It was an easy way to buy gas and essential when he was in Europe. However, I paid the bill, so he didn't learn about paying for what you spend. JB

We raised our son to be good at handling his own money—something he comes naturally to. He worked for us on our farm his growing-up years and earned his spending money and then some. He has totally dealt with his college expenses up to this time—he is a freshman. Parents must give their kids experience in money management all along the way. They need to make mistakes while they are still home, so they can be given guidance then. Once they leave home, it is pretty hard to really help them. L&KF

We discussed finances at length with our freshman. She was informed that if she chooses to be irresponsible with her finances, then she will relinquish the privilege of attending college. She was also informed that she was not allowed to have a credit card, she only has a debit card for her checking account. GB

My daughter definitely needs a credit card. She lives off campus, has a car, pays her own living expenses, etc. She has lived off campus since the beginning of her junior year, and thinking back, I would say that was about the time that she began to need a credit card. My son lives in the dorms. He is partially responsible for his school-related costs, but we paid those early in the semester. He doesn't have a car on campus and shouldn't encounter any emergencies where he really needs money. I don't think he needs a credit card at this point. PA

We did discuss credit cards, but in retrospect should have allowed him to use one before going to college as an educational device—learning that using a credit card for purchases is a "real" expenditure that is simply postponed or delayed in terms of payment. Also, that falling to pay off balances each month can quickly put one into a downward spiral of debt. SE

Credit cards for college students are very convenient. They allow students access to many automated machines on campus. It allows transfer of funds easily. Responsible use of credit cards is up to the family to monitor. JA

We have discussed financial issues quite in depth with our student, and she has an understanding of her financial responsibilities and knows that if she should opt to get a credit card, she is the one responsible for its proper use. We have discussed things such as no-fee cards, billing cycles, buying on a card only what you know you will have resources to pay for when the bill comes due, and the value of establishing a good credit rating. PE

My son does have a card. He used it for traveling and emergencies only. As early as his junior year in high school, our student began receiving offers in the mail. That is the time to discuss the pros and cons with children. I think it is important for teens to establish good credit card practices to insure full credit privileges when they need to buy cars and houses. It is too easy to apply for many cards with special gift offers and ruin a student's credit record at age 18! It is an issue just like drinking! Be responsible is our main message to our son. Make good choices. Think things through. G

We did provide our sons with a gasoline credit card so they would not be "stuck," unable to purchase gasoline (but normally they would use cash) or in the event of simple repairs. Our youngest (high school) went to Europe with a limited daily withdrawal bank card, which he used responsibly—the ATMs are a good method of getting cash as needed overseas. PH