College students need mentors for proper credit card management
In the 1990s fewer than 10 percent of college kids had credit cards. Today, that figure tops 70 percent, a staggering rise that led directly to revisions in Congress’ credit card legislation targeting college-aged students.
As Steve Diggs, a speaker and writer on life skills and money wrote recently, “The most striking part of this decline into indebtedness is that many of these young people are using their long-term college loan money to pay off short-term plastic debt.”
Diggs suggests three basic steps for parents, all with a “zero – tolerance policy,” that if broken, the card is cancelled.
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Set a spending limit
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Decide what the card can (and can’t) be used for, and enforce it.
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Pay off the balance in total each month. – Financial patterns are established early.
Credit card companies are making the adjustment to this rising concern by marketing new products designed to help parents monitor and mentor their college-aged children in the use of credit cards.
Case in point: Discover has a new offer for a teen prepaid debit card that offers parents built-in controls on spending that can be set daily, weekly or even monthly. Parents can also control types of spending by blocking purchases in liquor stores, hotels or tobacco stores.
The card can be opened with a minimum of $50 and has an annual fee of $50.
As Diggs suggest, the changes In spending habits could be tough, but ”tough love” may help turn back the tide on college students hitting the workplace already knee-deep in debt.
