As a mom of many (with three in college in 2009) and as "America's Family Financial Expert," I know a bit about college kids and credit card debt. Recent studies indicate that the average college student will graduate with $3,000 in consumer debt (in addition to $20K in student loans). This translates into BIG trouble for those starting out in life.
For example, our son, Daniel, recently graduated from college and then got married right away. Because he did things right and worked very hard, he has no car loans, no consumer debt, no student loan debt and a GREAT degree from the University of Texas. But then he lost his part time job--the one he was hoping would turn into full time work even as he was applying elsewhere (hint: it's not a great time to be a print journalist looking for work). But because he was debt free, he and his new wifey weathered the storm. Within three days, he had in 16 applications and within three weeks he was employed again--this time full time. If he had consumer debt, he would be in trouble.
So how do you navigate your kids toward financial literacy while in college? And how does the new Credit Card ACT impact your student? Click onto the link to hear the answers I gave on ABC NEWS NOW, "Good Money" to these questions and YOUR questions:
My question is why would you want to pay off a credit card while you're in college, making very little if any income? Why not pay the small minimum payment due each month, and pay off the balance after graduation? You would have a much higher paying job with a new college degree, and could pay off the balance (hopefully) within the first six months to a year of employment.
Teresa, Boise, ID
Our oldest daughter is entering her junior year of college, and has so far avoided any credit card debt by very purposefully not having a credit card. She has said that she knows the temptation for impulsive spending would be too great, so she would rather not open that door. While I admire her self-awareness, I am concerned that she is not establishing a "good credit" rating for herself. Is my concern valid? If so, do you have any advice for helping her manage a credit card responsibly?
Debra Devens, MA
Our daughter is a freshman this year. She is carrying 19 units so having a job is very difficult. She is on the waiting list for a job on campus and no one seems interested in hiring only for the weekends. It’s hard for her to get and pay off a credit card with no job. Do you have any suggestions?
Crystal Rough - Lancaster, CA
Is it a good idea to set up a debit card for college students so they can only spend what’s in the check acct? Wouldn’t that limit the % on a regular charge card if over extended?
Mitchell, West Bend, WI
Should parents help their student get a card, give them a set dollar amount, then let the student use the card to buy things, with the parents paying the bill, to build up the student's credit rating? Cherie Cheramie from Norton, OH
When you are a college student and keeping a budget, trying to pay credit card debt, what should you do if you don't have a stable income? Kelly, St. Louis Park, MN
All these readers got FREE copies of "The Little Book of Big Savings" and "Money Doesn't Grow on Trees." CONGRATULATIONS!
Ellie Kay
America's Family Financial Expert (R)
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