<p>My oldest daughter, who will be a freshman in the fall, has not had much experience managing money. I am trying to find a way to monitor her expenses, have her learn more about financial responsibility, and avoid wasting our limited resources. </p>
<p>Would a credit or debit card be best for her personal expenses and emergencies? For each of these options, she could have her own card or one on our (the parents') names.</p>
<p>Do you have other money management tips for a college student parent?</p>
<p>We went with a debit card for both our Ds and they would ask when more money needed to be moved to the correct account. It would allow us to know if spending got out of control. I also recommend they get a local checking account. The banks are usually there during freshman in-processing to sign kids up. Checking is usually free, and I know our Ds never really wrote checks before that so it was good experience.</p>
<p>I prefer credit cards (with very low limits) for my kids because they’re generally safer. They also allow the kids to start developing a credit history - something that my son was very thankful for when he applied for his first auto loan just after graduation from college.</p>
<p>My S has a debit card but this year (junior year) may get a credit card to start a credit history.</p>
<p>I just got D a debit card and she has already been ridiculous in her spending (even though it is her own money since she works) so I’m hoping she will straighten herself out over the summer. If not, she will be enjoying all the free things college has to offer come fall.</p>
<p>Also, a friend of mine made the mistake of putting a year’s worth of money in her daughter’s account at the beginning of freshman year. The girl spent it all by October. She was hoping her daughter would budget (and had discussed that topic over and over) but she didn’t. A monthly allowance was given after that fiasco.</p>
<p>Not getting a credit card my freshman year of college was a huge mistake in retrospect. By waiting until graduation…or in the case of my friends…even junior/senior years…we all had issues finding landlords willing to rent to us because of our lack of prior financial history…and this was back in the late '90s/early '00s. </p>
<p>Heard landlords in major urban areas like NYC are much more strict about checking on people’s prior credit histories than when my similar aged friends and I graduated college. Several apartments where friends are looking for roommates not only have credit checks, but also minimum annual salary requirements. </p>
<p>And one should never assume their parents/older relatives can…or more importantly…ARE WILLING to serve as co-signers and thus, be on hock for rental payments in case the fresh/recent graduate fails to make timely payments…or if their roommates fail to pay their portion. Something which those without credit histories will need to do…or look long and hard for the few landlords who don’t have such requirements…often apartments in less desirable/dangerous areas in sketchy condition. </p>
<p>Incidentally, had a conversation on this very topic with a recent graduate who has been wanting to move out of his parents house, but can’t because he doesn’t have a full-time job, lacks credit history, and falls below many landlords’ minimal income requirements. </p>
<p>Told him to get a credit card ASAP to build a decent credit history while living at home and mentioned how if I had followed an older aunt’s advice to get one freshman year, I would not have had the issues I had in finding rentable apartments. Also mentioned that it can take up to two years to build a sufficient credit history so that landlords won’t insist on requiring co-signers with great credit histories…whether parents, older relatives, or extremely generous friends.</p>
<p>Another thing to consider…credit cards provide much greater protections against dishonest merchants or those who provide abysmally poor service than debit cards…</p>
<p>We got our kids both when they started college. Made things easier when they graduated, as “cobrat” outlined. If the kid is smart enough to get into a college, they are smart enough to handle simple money transactions.</p>
<p>My D has both. She has a debit card tied to an account that I am joint on in our home city. It is a local bank and she is out of state, with no free ATM’s, so she also has a checking account with debit card local to her college. She can make one bigger withdrawal from her home account and deposit it, along with job earnings, into her college local account.</p>
<p>She also has a credit card that is ONLY for emergencies. It originally had a $500 limit, just enough for a plane ticket home. It has now been raised to $750. She is very good with money and has never used the credit card without telling me first. She knows that it always has to have enough room on it for an emergency plane ticket home. She is a freshman this year and I have always paid the credit card bill. She hasn’t used it for anything besides school related expenses that I would have paid for anyway, and it was just easier for her to use it and me pay it than for me to send her the money.</p>
<p>My children are very responsible with money, but only because I have taught them my expectations and I monitor carefully. They each have a credit card that is attached to one of mine; the monthly statements lay out exactly which card spent how much money and the card provides me with exact notification for each expenditure as an email within moments of the charge. They know what they can charge without permission (mainly a Starbucks or fuel for the car) and what they need to ask permission for first. They also know if there is any funny business, I cancel it immediately. No “three strikes.” I am adding a debit card for my son this fall since he’ll be away from school, and I will link his account to my main checking account so I can add money every month and monitor his expenditures. He just won a modest scholarship and it will serve as the basis for his new checking account, minus the deposit I just made for his college acceptance. Both children have learned there is no free lunch. I will say, they have friends whose parents have few restrictions on charges, etc., but our walkway is not lined with gold; thus, there are strict parameters around use of credit cards–and soon, on the debit card.</p>
<p>Agree with both. Our son got a credit card through the bank shortly after opening a bank account last year when he was graduating from HS. He charges things on line and then immediately transfers money into the account so it builds up his credit history but he doesn’t have to worry about remembering to pay on time. We don’t monitor it. It’s his money. He also has one of our credit cards with his name on it so if we’re paying for something, like a train ticket, either of us can charge it.</p>
<p>DS has a debit card, for an account here that I’m joint on. He also has an account at school with a debit card, but I’ve realized that he doesn’t use it - he just takes money from the joint account.</p>
<p>He has a credit card but it’s on my account. I set it up so that I get alerts every time he uses it, so I can keep track of it. When he first went to school, there was a problem with the debit account (someone stole my card) so there was a hold on it. DS used the credit card then, but he hasn’t used it at all the last few months.</p>
<p>He didn’t like using the credit card because he wanted a set budget, and he prefers to just withdraw cash once a week and live on that. (He is on a “pay as you go” account for his mealplan, so the weekly budget also includes all food.) I suggested one amount per week and he actually suggested a lower amount. He lived on the lower amount for a while, but as he started going out more, he’s now back to the amount I suggested originally! lol </p>
<p>If he has a big expense and it will put him over the basic living budget, he lets me know and we set an amount. (he needed a tuxedo, for example.)</p>
<p>I only put limited funds in the bank account at a time though, just in case. It’s also a good way to make sure that he calls every so often!</p>
<p>Mine have had ATM/debit cards since they were 13. The accounts are joint accounts, so I can easily transfer money if I need to. This works well for plane tickets and such.</p>
<p>My oldest got her credit card the day she turned 18. She paid for tuition on it, maxing it out and paying it off immediately, which made her limit go up and up. She now has excellent credit, and does not need anyone to co-sign for apartment leases and such. She’s 22. </p>
<p>I haven’t monitored either’s spending, other than noticing their accounts always have money in them.</p>
<p>D1 only had a debit card in her name while in college. We didn’t allow her to have a creit card. We gave her an AmEx card in her name from our acct. When she graduated, with a job, she was able to get her own apartment and a credit card with higher limit than ours. D1’s checking acct was tied to ours, so I was able to monitor her spend. We also only transferred over monthly allowance to her acct, not a whole year. We paid for for rent, so we didn’t transfer money to her acct. </p>
<p>I personally think having a credit card in college in order to build up credit score is over rated. What I see, more often than not, is college students using their credit cards to buy toys the couldn’t normally afford, and hiding it from their parents. They often graduate with 5-10K credit card debt on top of their student loans. It was the reason we didn’t allow D1 to have her own credit cards. She had to buy everything with cash.</p>
<p>Older s hated debit cards (like me) so used only credit cards, but was able to get them back in the day when it was easier to get. YOunger s uses both debit and credit cards. There are some situations where a debit card won’t be accepted, so having both is helpful.</p>
<p>Just watch the fees on debit cards. We started out with a Wells Fargo one for D (since the WF ATM was right on campus and there are several WF branches near my office and our home so it makes putting cash on the card very easy) but the only way to get no fees was to have a “sweep” of $25 into a savings account. So D had to have a balance of $25 or more in the account each month at a specific time that would then get swept into a linked savings account in order to avoid a monthly fee. Guess what. She never made sure to leave $25 in the account at the specific time so were moved to the $10/month debit card fee. Then she had signed up for a free 6 month trial of Amazon Prime but after 6 months, they charged her debit card $39.95, which put her into overdraft (since balance at the time was low) which resulted in a $35 overdraft charge.</p>
<p>When I walked into the WF branch to cancel it, the clerk said: oh – since you have your mortgage with WF, it should have been a no fee card. </p>
<p>But it wasn’t. I canceled it anyway.</p>
<p>We have now switched to a Capital One card which promises no monthly fee, no fees for ATM withdrawals at other banks. So make sure you are completely, thoroughly aware of any and all fees.</p>
<p>My son has a “student account”. This package included (we could have tweaked as we wished) a credit card ($400 limit to start), debit card, and a savings account. I don’t recall the details, but one could end up in a situation as described in post 15. DH checks the account periodically. So far it has gone well. </p>
<p>Our son also has an additional credit card that is based upon our credit for an emergency.</p>
<p>Our son will never use either credit card without discussing it with us first (even if it is a very small charge).</p>
<p>Make sure you and/or your husband are on the account so you can check status on line. This is very handy when you haven’t heard from your child in several days and you see from their debit card activity that they’re still alive, buying overpriced coffee and frozen yogurt.</p>
<p>Keep in mind that not every young adult or even adolescent is irresponsible with money and a spendthrift. I certainly wasn’t at that age…or even now. Heck, my older relatives had the exact opposite complaints about my spending habits/finances during and just after my undergrad years. </p>
<p>As for the larger discussion…if parents won’t allow their college students to have credit cards in undergrad, they’re probably going to be faced with the choice to either ask them to act as co-signers on their first rental apartments/car loan or do what I did…rent a rundown apartment in a seemingly sketchy neighborhood with a sketchy roommate.* </p>
<p>Heck…even the apartment I rented a few years later in a much better area unnerved older relatives who all felt I was “far too cheap” and should have rented better apartments “suitable to my income-level.” At that point…just laughed them off.</p>
<ul>
<li>Really wasn’t bad considering it was an improvement to my childhood crime-ridden NYC neighborhood. However, it would have scared the living daylights out of most overly sheltered upper/upper-middle class suburbanites who don’t get out very much into the less fashionable districts of their local cities.</li>
</ul>
<p>Happykid has an Amex card from my account, and a debit card from her student account at the credit union. I’m joint on that so I can keep track of the balance if necessary. That credit union participates in a nationwide network with joint branches all over the country. No need to open a different account where she will be thus fall - maybe no need to open another one ever!</p>
<p>Debit card = bank takes my money right now, no guarantee of fraud protection
CC = bank give me 30 (or some such amount) days of float, fraud protection</p>
<p>When DD was in 5th grade she ‘borrowed’ on her allowance. We made her pay back with credit card terms…lesson learned. Now, each of our kids has a credit card which is under our (adult)account. They use it responsibly. DD (college sophomore) uses her debit card per her discretion. She has taken Stafford subsidised loans, with the agreement we, her parental units, would give her the $$ for payoff, simply for the purpose of establishing a credit rating.</p>
<p>If a student is able to handle credit…why not take the 30 day float?</p>