The credit card dilemma is difficult. There are potentially devastating financial consequences for parents and students alike. At eighteen, credit card companies view students as legally independent consumers and mount targeted marketing campaigns. It is theoretically possible to acquire multiple credit cards without a parental co-signature and charge to the maximum limits. Secondary to a limited income, students can easily fall into a pattern of spending beyond their means and subjecting themselves to horrendous interest rates if bills are not paid in full. Late payments or failing to pay bills will impact a student’s credit history and their parents as well if they are co-signers on the card.

There are multiple credit card type products. Making a decision on which will be the best is dependent on a number of factors. Here are some things to consider:

What is the purpose for the credit card?

To build a student’s independent credit

As a convenience for parents thus avoiding providing cash for mutually agreeable purchases

To provide students with a budget and opportunity to manage finances

To capture spending and qualify for airline miles or promotional rebates

How will the credit card be used and how much credit will be necessary to cover selected scenarios?

Routine personal expenses, gasoline, entertainment, clothing, or food

Paying major bills (tuition, housing, food plans)

Unforeseen expenses such as automobile or health care

Do parents want their student to have full access to parental credit limits?

What credit card products should be considered?

Independent student credit card with no parent co-signature

Independent student credit card with parent co-signature

Parent credit card with student as an authorized user (this means full access to the card’s credit limit)

Parent debit card with the student as an authorized user (this means full access to the parent’s checking or savings account)

Independent student debit card for their checking or savings account

Secure/Security card (deposits are made in advance to cover a capped spending limit)

Who is responsible for the credit card bill and where should it be sent (school or permanent address)?

Parents receive the bill and they pay

Parents receive the bill and they forward it to the student to pay

Student receives the bill directly and they pay

If using a debit card, where should the statement be sent (school or permanent address)?

To the parents

To the parents and then forward to the student

To the student directly