Credit Card for College Kid

S

Shann

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Sep 2, 2004
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My Son is heading off to college. I'm getting him a credit card of mine for emergencies (that way I get the bill and see if he is using it). But I'd like to have him start to create a credit history.

When I was in school many moons ago, you could get a 200-500 limit Visa just by signing up on campus and they'd give you a beer mug or something too for signing up. But I imagine things are tighter now.

Can someone without credit get a card (he has had a checking account for years but not a credit card and never borrowed money). I see you can do prepaid cards but they seem to have monthly fees.

Also his name (and mine) will be on his lease for his apartment, does this get reported somehow so he can start to build a rating?

Thanks.
 
A beer mug for signing up! :D :thumbup:

How about a secured card? You put $500 or $1000 (or whatever) in an interest paying account and use it to secure a credit card - the amount on deposit is the credit limit. After a year or two of responsible use and payment, they usually release the security and the card becomes a regular unsecured card. You do it all in your son's name so he builds a credit rating.
 
Get a cell phone in his name. Cable helps too. When I was 18, my mom put all of the cable services on my name to help build credit.
 
Cell phones, cable TV, rent, etc. do not show up on your credit report with "the big three" agencies. Instead of a credit card, put $500 or $1000 into a statement savings account with ATM and debit card access in your name so you get the statement every month. Give your child the card and PIN number. Tell him it's for emergencies and that you will expect am explaination of all charges as soon as you get the bill each month.

If you want to, ask at your local bank about arranging a true credit card, Visa or Master Card, for him with a fixed limit of $250 or some such thing.

Also, sign your son up for a credit watch service with the reports coming to you. This way you can see any new accounts he opens.
 
I was in your sons position not too long ago. No credit, just starting out. I had about 3 years of rent paid on time in my name and that alone was not enough credit to get an actual credit card.
So I went the secured credit card route. And it was working fine until Chase bought out WAMU and canceled all the secured cards that WAMU had issued:mad: Now that everybody has cell phones, whoever "they" are don't count them towards your credit score.

As mycroftt stated, I think that the secured credit card would be a good way to go. My contract was for one year. At the end of the year there would be a review and depending on whether or not I had paid on time and kept my balance down WAMU would either issue me a real credit card and open my held account or have me sign another similar contract. But of course Chase had other plans. If you can give your son a loan he can set up his own secured credit card account and in a year or two he can pay you back and build his own credit.

Good luck
 
A credit trick someone shared with me:
This guy had an 18 year old who had 0 credit. The guy took his kid into a bank, and had him take out a $5,000 loan. The father acted as a co-signer, which made the loan go through without a problem. Then they repaid the loan in a lump sum a little while later. Wash, rinse, repeat. Pretty soon credit card companies were sending him offers left and right.
 
Loan your kid $1000 for a secure card with the following provisions: first, that he will mail you copies of the statement every month (ask the CC company if they can, perhaps for a fee, mail you a duplicate statement directly), second that when he graduates you will gift him the $1000, otherwise he has to return it at the end of four years.

In four years, this program will establish an excellent credit record for him with which he will have no problem getting a "real" credit card, qualifying for a lease, getting a car loan, etc. And the grand? After four years you won't even miss it anymore and it will help him get set up in his new life. In the mean time, it's a nice little extra incentive for him to stay in school and finish.
 
it is unlikely that he can get a regular credit card if he is below 21 and does not have a verifiable source of income

secured credit cards can have very high fees that border on outrageous. a credit union will usually have a lower cost option.

cosigning for a card makes you liable for everything he does with it. in most cases this is not a problem but can be a disaster for the parent.

i understand the desire for having a credit card for emergencies, but is it really necessary? people talk about "building credit." outside of a home mortgage why do you really need this? if you regularly use a credit card you almost always end up spending more...myself included. i am not totally anti credit cards. i use them for travel and internet/mail order purchases, but using them as a crutch to get out of jams often leads to debt and consumer debt is a great impediment to building wealth. college students are particularly prone to this

while a decent "credit score" will be needed for some types of financial transactions, it is quite possible to make it through life without depending on FICO scores and debt. i would not waste money paying for a credit monitoring service UNLESS you are liable for his expenses and have reason to be concerned. you can also get a free copy without the fico score once a year.

as a footnote, one of the banks i deal with occasionally sends me access to my credit score and credit history for free. it is interesting to note that my score (which has always been really high) has slowly drifted down (still in the excellent category whatever that means). i have never had any outstanding cc debt, never been late on a payment/bill to anyone but it has been so long since i have had any car loans/student loans that my score went down a bit. this despite an increasing net worth and income over the same period. FICO does not use income/wealth as a measure of credit worthiness which probably helps explain some of the mess lenders and creditors find themselves in.

the reliance on credit scores and the games people play to increase them is foolishness.
 
I got my first credit card as a college sophomore in 2001. I had no credit beforehand, so the interest rate was ridiculous (like 20%), but having a credit card and paying bills on time has made my credit record rock solid.
 
I got a regular card when I was 18. 2500 limit. Just sign up for an amazon card, you get 30 bucks off your first purchase, which can be for books because they are way cheaper on amazon. I use it for everything i can now because i get points for it.
 
They still hand out credit cards on campus like candy.

Most schools will let him set up an account that uses his ID card for a debit card. Just about everything he needs is available on campus.
 
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