Can Your College Kid Handle a Credit Card?

September 10, 2019  |  

Can Your College Kid Handle a Credit Card?

According to the government student loan authority, Sallie Mae, nearly three in five college students (57%) have credit cards. Among those who do, the average student cardholder has five separate accounts—that’s right five! –and carries a total balance of $1,183.

That may sound high, but students who don’t use credit cards delay building a credit history This may hurt them when it’s time to rent an apartment or purchase a car after they graduate. It also impedes their lifelong financial literacy education.

Like most things in life credit card debt is a trade off. You want to give your young adult a good head start in life. But how you do help them build a credit history—and have purchasing power for day-to-day necessities when not living at home– without risking the damage that comes with missed payments and high balances?

Like all things in planning, it depends on the kid. Well before college, my kids showed responsibility with money, and I gave them control over their funds early on. It was a no brainer to give them a credit card, and it gave me peace of mind. I realize, not every parent is that lucky and I still have to question my kids about “needs vs. wants” when reviewing their monthly statement with them. “Just because something is on sale doesn’t mean you HAVE to buy it.” Sound familiar?

How can parents ensure a credit card is used responsibly? 

The credit card apps are very powerful now, and you can get texts for purchases or see recent transactions. If you are concerned about a student’s spending, start with a low credit limit and build from there.

If you have a responsible young adult in your life, congrats. Give him or her a shot with a low-limit credit card and see how they handle it. The primary benefit is that they can start building credit early and start adulthood on the right financial foot.

The best way to ensure they use it responsibly is to monitor [the credit card] continuously and to keep your name on the account. That way, if spending starts to get out of hand, you can always freeze the account to cut your student off.

Also, I recommend giving your student a secured credit card to limit the charges to whatever amount the card is secured by. And this helps the student build a credit history. I would not recommend letting them have an unsecured credit card.

Also, put a cap on the spending limit. Make sure your child (not you) makes the payments each month — including the interest. When young people feel like they’re spending real money out of their own pocket, not just swiping plastic, the cost of things in the real world really starts to hit home. If it doesn’t sink in immediately, ask them how many hours of yard work, baby-sitting or life-guarding they’d have to put in to pay off last month’s credit card bill?

Peace of mind

The No.1 reason to give a college student or young adult a credit card is safety. Even if you do not want your child to spend money on your card, it’s a good idea for them to have one in case of an emergency. No matter what the reason is, you can’t put a price tag on the peace of mind you’ll gain by knowing your child has access to some money in case they really need it on the spot.

Unlike when we grew up, it’s really easy to track credit card spending today. You don’t need to wait for the monthly statement. I get texts every time I use mine, so as a parent, it’s easily to monitor your card to make sure your young scholar is using it properly.

Also, it’s common practice to set a limit for the card each month.


Though it may sound counter intuitive, giving your college student a credit card is not a financial death sentence. It might be a very wise choice in the long run. But for the all the benefits that credit cards provide, there are just as many dangers. Parents who choose to give their college kids a card should be sure to provide direction and oversight to help them manage their cards responsibly. Again, it depends on the kid.

If you or someone close to you has concerns about your teen or young adult’s financial responsibility, please don’t hesitate to contact me.

About Mark Rioboli, CFP®, CFS

Mark A. Rioboli, CFP®, CFS is Director of Wealth Management for Independence Advisors, bringing over 30 years of experience in the wealth management industry. Have a question for Mark? CLICK HERE TO ASK MARK
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