If you have a child bound for university or college this fall, now may be the time to sit them down and have "the talk". The credit version, that is.
Because along with an abundance of frosh week activities chances are, this September, they'll also be faced with the opportunity to acquire credit cards-cards that will come with plenty of free swag, like t-shirts, and booze coolers and other amazing incentives, in exchange for signing up. The thing is, without a thorough understanding of how credit cards work, these little pieces of plastic have the potential to destroy an individual’s credit rating-before they even have a chance to establish one.
So take this time now to sit down with your child and talk to them about credit cards. If they're going to have a job in that first year of school, it might not be a terrible tool to have to build their credit rating-provided they keep their credit limit to a minimum (which can be done with a quick phone call) and they pay their balances off every month. Make sure they fully understand both the pros and cons of this financial tool, and the dangers of falling behind on their payments. In some cases, it may even make sense to set them up with a prepaid card, to help them get the hang of it.