Many young adults who are leaving for college usually receive a credit card from their parents, even if it's "just for an emergency." Since most college students are unfamiliar with the financial landscape, it makes sense to have a talk about it. If young adults are not educated on credit card rules, debt and how their spending and payment habits impact their credit, they may enter into a cycle of debt that will follow them for years after graduation.
According to South Carolina station, WMBF News, parents at Francis Marion University are abating their fears by talking to their children about these issues before they leave for college - and explaining why their credit cards are staying at home. One mother, Mary Tester, said she will only allow her son use of a debit card while he's away at school.
"I don't think they need it in college," Tester told the station. "Until he can show us that he's got what it takes to even work a debit card, then we'll talk about credit cards."
In addition to local support from parents, FMU - whose policy bans credit card issuers from stepping on campus - will host a "financially fit club" to students to educate them on responsible money management and credit habits, the news station said.
Parents of college students may also rest assured that the provisions set forth by the recently enacted Credit Card Accountability, Responsibility and Disclosure Act will also make it more difficult for young adults under the age of 21 to obtain credit cards and accrue debt prior to graduation. The new legislation aims to protect young adults by requiring them to prove they have sufficient income to make credit card payments or have a co-signer present before they can secure a credit card.
Reports reveal that children who are taught smart financial habits early are more likely to adopt smart money management habits and be more cognizant of debt. Parents may consider explaining the importance of a credit score and how it is calculated. Sitting down with young adults and going over a parent's credit report may also give them a firsthand look of what information - good and bad - employers, lenders, insurance agents and landlords will look at to determine creditworthiness.