More and more teens and college students have credit cards. Like the population at-large some have good deals, some don't.
Card companies target both groups because they are a fast-growing segment of the population and they have money to spend. So it's no surprise when a 16-year-old high schooler or a college freshman receives piles of offers.
If you're a college student, or the parent of a college student, Bankrate.com can help you find the best credit card deals. Just go to our student credit card search page.
You'll see rates that are generally higher than normal cards. Look carefully, because while cards are easy to get, the card companies commonly offer heftier fees and interest rates, and smaller credit limits, with these cards.
Parental responsibilityThey're easy to get because parents are often obliged to back up their children's buying in the event the kids run a little short. Even if they aren't legally obligated to, parents commonly come to the rescue and pay those bills. So parents, make sure you read all the terms, especially with co-signed cards. You'll probably be there for the children, but it's nice to know the rules beforehand.
Which brings up another golden rule: Experts in debt and credit management say emphatically that students should use the credit cards only for emergencies (pizza is not an emergency). Otherwise they're paying a high premium for everyday purchases, running the risk of damaged credit and learning some bad credit habits at an early age.
Consider voluntary limitsConsider putting a voluntary limit of less than the card company will allow. After all, if the card is used for emergencies only, you don't need all those thousands of credit dollars out there tempting you.
If a young person has a credit history and can qualify for a regular credit card, it may work out to be a better deal. (But pizza is still not an emergency.)
All students and teens should remember that a credit card is a stepping-stone to a solid credit history -- something of major importance to their futures. Misused, it can add a stain on their credit records that will take years to erase.
Did you know…
The average undergraduate has $2,200 in credit card debt, according to Nellie Mae, the largest provider of student loans.
Security with secured cardsSecured cards are another option for teens and students. Banks commonly offer these products, which are cards where the cardholder puts money in the bank as security. That money guarantees the card issuer will be paid if the cardholder fails to pay the bills. The credit limit is determined by how much is secured in the bank as collateral.
There are also cards available that allow parents to link a child's card to their accounts, or let them keep refilling the teen's or student's accounts as they go along. It's a way to keep up with what's going on, limit spending but still provide the freedom and convenience of a card.
Parents also need to be careful in case teens apply for and receive credit cards without the parents' knowledge. It's not supposed to happen to anyone under 18, but there is ample anecdotal evidence of people far younger filling out forms and getting their cards.