The best way to ensure that your child knows how to manage his finances well is by imparting the basic knowledge at home. Ensuring your kid has sufficient knowledge about money and its management before he steps out of your home to enter college will give you peace of mind when he begins to wield a student credit card before long.
Most of the children are not able to exert control over the usage of their student credit cards because of the lack of information when they were in their growing years. Hence, when they end up with cards of their own, they mistake it to be easy money and spend frivolously until they are left with no available balance on their card and a huge credit card debt to clear off. As per one of the surveys conducted by Sallie Mae, the average credit card balance on student cards is $3,173 and only a merger 17 percent of the children repay their outstanding dues in full each month.
Thanks to the Congress for passing some new regulations governing credit cards, it is now not easy for children below the age of 21 to obtain credit cards. They have two options to choose from if they intend to apply for a credit card. The first option is to request one of their parents to co-sign the application form. The second option is to show proof of employment that substantiates that they can pay off the balance on their credit cards.
However, there are instances where children are asking their older siblings to co-sign on their forms so they can get access to the credit cards. If this was not enough, another company called Higher One has tied up with MasterCard to create accounts for students into which the money from their financial aid will be credited. The students will be issued a card which will help them get easy access to the money at any point from anywhere in the world. The flip side is that these cards carry high fees on them.
Considering these instances, it is difficult to conclude that the government has take sufficient measures to ensure students don`t fall prey to debts. The only good part is that your children will now have to approach you to request for your signature on the application form if they need a credit card. Then again, the responsibility lies on your shoulders as parents.