Can your College Freshman manage a credit card?

Some questions that need to be answered to decide whether your student will be able to manage a credit card are:

Are they accustomed to paying bills on a regular basis? Will they be able to maintain a bill paying routine when they are under the stress of exams, or sorority/fraternity rush?

If not, late fees will probably accrue and interest rates could be increased. If they do not have a bill paying routine or if they are disorganized, the stressors of college life could cause them to
forget about paying bills on time.

Will they read the credit card inserts that indicate when a change has been made to their credit card? or just toss it, because it doesn’t seem important?

It’s important to see what conditions of your card agreement have changed and when they are effective, so you aren’t caught holding unexpected fees. Its fine print and they don’t often get read, the financial institutions know this.
 

Are they prone to excesses, when they go shopping? Do they come home with items that they really do not need?

Since when you use your credit card it’s a loan, if your student tends to shop a lot without discrimination, they may start incurring these multiple loans on items that they do not need and probably will not use. Using a credit card removes you emotionally from your money, and you often do not realize just how much you have spent.
 

Are they easily influenced by friends?

Will they succumb to buying everything their friends buy, or suggest that they buy?  If yes, they probably should not have a credit card, or one with very low limits.  A debit card will help these students to understand the limits of their budget, and help them become strong enough to say no to their friend’s suggestion if it isn’t right for them.  Caveat: Debit cards do not have the same protection that credit cards do for unauthorized purchases.
 
Would they want to help a friend out by putting the friend’s purchases on their card?
While it’s neighborly to lend a hand, it’s important to not be left holding the bag by manipulative friends. Sometimes students will fall into this trap in an effort to fit in.
 
Are they OK with making minimum payments on the card?
If they are, that is not a good sign. Does your student understand that each time they use a credit card, that they just took a loan from the bank or credit-card company.  Just because they were able to obtain money or goods by flashing their plastic, doesn’t mean it’s free money. Someone has to pay that money back, and that money has to be paid back with interest. So, if the student gets in the habit of making minimum payments then the cost of whatever item they used the card to purchase will cost them way more, way, way, more.
 
What would they consider an emergency for which their credit card could be used?
Pizza at 1 AM in the dorm is not an emergency. Purchasing an outfit to go out this Saturday night is not an emergency. Taking a trip with the boys is not an emergency. Those things should be in the budget, if they are not, the student needs to understand that they cannot afford them, unless they find a way to increase their income. You as the parent needs to work with the student and set expectations as to what an emergency is and on what kind of emergencies you will allow them to use their credit card.

Often, conversations about these issues, take place somewhere about the middle of freshman year after the student has made some horrendous and costly mistakes.  If you plan on allowing your new college student to have a credit card, start having these conversations now, so you will have several months at home with your student to help iron out any of these financial issues.