<p>The above further underscores my earlier point…the advice both you and Oldfort are providing is really only applicable to the minority of families with excellent credit ratings. </p>
<p>Not very useful for those who aren’t in such situations…for one reason or another…especially when statistically…most people asking for such advice…even here on CC are more likely to be those with mediocre-abysmal credit due to the recent recession and its effects. </p>
<p>I say this as someone who currently has excellent credit…but understand that I’m in a distinct minority.</p>
<p>Both. Our kids got debit cards when they were 13 and have been using them ever since but a credit card serves a different purpose so they got those as soon as they turned 18. We mainly wanted them to build credit ratings but also for emergencies-car problems, etc. Our older kids put all of their gas purchases on their credit cards and pay them off monthly and have excellent credit ratings as a result. When they needed to buy cars etc. it saved them a ton of money in interest as well as things like auto insurance, etc. Our oldest is looking at buying house and was easily pre-qualified for a mortgage because he has 5+ years of credit history now.</p>
<p>Our debit cards offer fraud protection and since the kids’ accounts are/were linked to our accounts at Wells Fargo, we have never paid a fee for anything with them. The type of account we have doesn’t charge for using ATM’s outside of the Wells system so that is nice as well. They have access to gas stations that have no fee usage as well so they are able to get cash as needed without fees.</p>
<p>The debit cards are great for learning how to manage money. Get her one now and have her start practicing. Put whatever money on there and make her responsible for tracking how much is there, using just that for buying everything she needs, etc. (gas, clothing, school things, etc.).</p>
<p>mommafrog–sounds like you need a different bank if they are putting those “huge” holds on your debit cards. Debit cards are no less secure than an ATM card or a checking account. The “biggest” hold I have ever gotten on my debit card is a dollar, one dollar.</p>
<p>cobrat - I think most people on CC have very good credit. People do not need a large paycheck to have good credit. I would say majority of people own their own homes, and that would be very hard without decent credit. I think your experience is probably more out of sync.</p>
<p>From what I am reading here, most CC’ers have saved diligently since their kids were young for college, put money away for 401K, and have not lived beyond their means. So I don’t know why you would think a lot of them would have bad credit scores.</p>
<p>Credit cards would be the go to if you trust that your child can spend money wisely. Debit cards are like “pre-paid”, it truly place a limit on the amount of money that can be spent.</p>
<p>My freshman son has both, a debit card/checking acct which is joint with me. He is responsible for his spending money for the year, but if he needs an emergency transfer, I can easily transfer money to his account. He also has a discover card, but he leaves it here. I use it occasionally, and pay it off, that way he will have an excellent credit score by the time he graduates.</p>
<p>Not necessarily depending on requirements for getting credit. Know plenty of folks before the 2008 recession who managed to buy homes without good credit because they were able to buy an inexpensive home outright with cash with family help or took out a loan with higher interest payments to account for their lower creditworthiness. </p>
<p>Oddest part is only one of them is undergoing any issues related to the 2008 recession…and that’s a friend with a high income job at a tech company…but has high college loan debt and is severely upside-down in his condo mortgage because the local real-estate market crashed a few years after he bought it so he could relocate to his company. </p>
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<p>A mediocre/bad credit score can happen even with actions you described above as a result of huge unexpected expenses such as medical emergencies, natural disasters not covered under most standard housing insurance*, etc. </p>
<p>It is a totally different ball game now. My experience with the credit card rejections is in 2010 and later. Don’t even get me started on Cap One. I wanted one of their cards this year since they are one of the very few cards that do not charge a 3% international currency charge fee which I get hit with even on office purchases from Canada. With some astounding credit limits on other cards paid off every month and a credit score that exceeds 800, they even turned me down saying I charge too much a month. They didn’t seem to care that there was no revolving balance and the charges were modest relative to income and assets.</p>
<p>Cobrat:
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<p>I doubt this is correct. DS has no credit obligation to make good on charges on my account even if the associate card is in his name.</p>
<p>PG :
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<p>I thought so too but there was no way they could help me. I even appealed to a special relationships banker I had at a brokerage firm who would jump through hoops for my extended family and he couldn’t even get a $500 limit co-branded VISA card with their firm. They saw this kid had assets in his own name that exceeded anything he could possibly spend before they shut down the card for non-payment.</p>
<p>DS did get a Macy’s card and tries to use and pay that to establish credit. If anyone has luck getting a non-secured VISA or Mastercard for their college aged kid in 2012 (in his/her own name), please post that application link as a service to those who would want their kids to have their own card.</p>
<p>A card in a child’s name that is on the parent’s account is NOT the same as the child having a card in their own name. The child is just an authorized user on your account and does not form their own credit rating. Most larger banks have a college credit card available for kids 18 and older. Limits are in the $1000 range or so and they are in the child’s name only. It is a great way to get started on a credit rating for your kids and to have the back up of a card in their name. The card our kids have is not a secured card. Look on the website for whatever major bank is in your area. We have our’s through Wells Fargo.</p>
<p>But it has never once occurred to me that a credit card wouldn’t or shouldn’t be fully paid off by the end of the month. The idea of holding a balance til the next month - just doesn’t even compute for me. I have no clue what the interest rates on my cc are - because they’re irrelevant. If I think that way, then why, again, would a debit card be of any use? I’d MUCH rather teach my kids “use a credit card and pay off at the end of the month in full” (you get the float and you get fraud protection) than “use a debit card.” I see zero, zip, zilch benefit to a debit card over a credit card.</p>
<p>Both of my son’s have Wells Fargo credit cards and got them as rising college freshman. One son had to get it co-signed and a $1,000 limit but the other was able to get his own card with a $1,500 limit. No idea why the requirements and limits were different. They were easy to get. Our daughter, who has worked since she was 16 had a more difficult time getting her first credit card as a college senior. I got her an American express card to use at Costco, where we shared a membership. For some reason, that did help her credit score. We saw her score report with that card listed. Thank goodness I always paid if off in full because it helped.</p>
<p>Yale, I absolutely hate my Cap One card. Never use it. I have a wonderful card through my bank that I use where I get cash back.</p>
<p>Anyway, I know its a different ball game now. I just wanted to explain how some young people on here have cards as you asked a few posts back :)</p>
<p>Pizzagirl–we had a credit card that paid out 1.5 points vs 1 point for airline miles if you carried over a balance. We always carried over $25 on that card because the points added up faster then and the $.87 in interest or whatever it was was meaningless vs the points :D. They stopped that after they got smart, however. It was nice while it lasted.</p>
<p>YaleGradandDad: “I doubt this is correct. DS has no credit obligation to make good on charges on my account even if the associate card is in his name.”</p>
<p>I think something changed with the new credit card rules that were put in place a few years ago. I was on my mother’s account in 2003, but my credit history dates to 2000 when the card was first opened. I had no obligation on the card as I was just an additional card (same number, but my name). It shocked the banker at Wells Fargo to see I had gained credit history from before I actually got a card. It is definitely much different now.</p>
<p>The issues you mention with Cap One are less likely because you “spend too much” and more because you don’t carry a balance. Credit card companies have been turning down people with excellent credit because they don’t feel they will make any money off of them.</p>
<p>Yes, banks/credit card issuers hate those of us who pay our balances in full on time each month so much that they disdainfully refer to us as “deadbeats”. </p>
<p>And yes, coming from them…I take it as an endearing compliment. :D</p>
<p>I considered that paying off your balance each month could have been an issue but they are required to tell you what in the credit report leads to denial and what I stated is what they told me. I think they officially said I used too high a percentage of my available credit on my main card (I’m guessing about 25%/month which would show as 50% just before payment is due) but it was paid in full showing it was done for my convenience and to get the 2% cash back bonus. Other large limit cards sit untouched.</p>
<p>Like PG, I wouldn’t think of borrowing with the card and not paying in full but it is a bit ironic that this makes me a “deadbeat”. I do receive CC solicitations each week so I was a bit ****ed off at Cap One for rejection on the one card I desired.</p>
<p>I’m glad SteveMA’s kid had luck with Wells Fargo. He did try Chase and the co-branded brokerage card. The problem with continued efforts with more banks is they ding your credit score with each failed attempt. Current income for him is in the four figure range and who would expect otherwise from a full-time college student? I expect he’ll have success once he is out of school and in the real job market.</p>
<p>I checked D1’s credit report, our AmEx card did show up on her credit report, and our balance on it, which I believed helped her with her credit score. Her debit card did not show up, as expected.</p>
<p>My kids have both. Debit cards with their money in it and credit cards that we cover. The credit cards are for emergencies, gasoline, and other stuff that we pay for. We also have over-draft protection on their debit cards. </p>
<p>When older son was a frosh, we had to get on him for overspending on our credit card. He didn’t have a part-time job as Fall Frosh, so we were paying for most of his day to day expenses that semester. Once he tired of campus food, he and pals started eating off campus and the credit card bills shot up. This was annoying because he had the “all you can eat” plan at school, but had stopped using it. :(</p>
<p>Some kids are very good about remembering what they’ve charged. Some are just awful, “What? I have hardly charged ANYTHING!!” And, then you show them that they charged 6 different times within 72 hours.</p>
<p>I don’t necessarily think this is limited to adolescents/young adults. I’ve met far more than my fair share of older adults who are just as bad…if not worse about their spending/keeping track of expenses. </p>
<p>Unless you’re very lucky/sheltered…we’ve all probably know a few older adults who are like this as well. :(</p>