2010 Credit Card Guide
Credit card guide: World globe and credit card on bright blue credit card composition
credit cards
Under 21? Credit cards hard to get

Be added as an authorized user to a parent's credit card account

Looking for an easy way to teach your son or daughter about credit for a few months without the burdens of becoming co-signer?

Consider adding your son or daughter as an authorized user to one of your credit card accounts. An additional card will be sent to your son or daughter and they will be able to use the card to make purchases that they need. You'll be able to monitor their spending and payment habits with ease.

"You can use it as an opportunity to teach them solid credit habits," Levin says. "Work with them for six months to a year."

Once your son or daughter is ready and eligible to get a card on their own, let them. Removing an authorized user from your credit card account is a snap.

"It's easier to remove an authorized user than a co-signer," Detweiler says. "With an authorized user, you can typically make a phone call and have them removed."

Remember, by adding a son or daughter to your credit card as an authorized user, you'll be sharing a credit line. So be clear about the spending limits on the account and monitor all spending carefully.

Use prepaid cards

Prepaid debit cards, which come with a Visa or MasterCard logo, can be used anywhere Visa or MasterCard is accepted.

Once you load money on a prepaid card, you're free to make purchases up to your card's limit. When your balance gets low, you load more money on the card and you're free to make even more purchases.

These cards can be convenient payment tools for folks with little or damaged credit, and they can be a good budgeting tool for college students. Parents can load up the card with, say, $500 at the start of the semester and let the student spend the $500 as they see fit.

Be sure to watch out for fees, though. Many prepaid cards come with an assortment of fees, including activation fees, monthly service fees, maintenance fees and transaction fees. You'll need to weigh the costs of using prepaid cards carefully.

Use debit cards.

A debit card, which is linked directly to a student's checking account, can be a handy way to make purchases. Debit cards with a Visa or MasterCard logo on the front can be used anywhere Visa or MasterCard is accepted.

"A debit card is really just an electronic check. You're taking money from your checking account," says Cate Williams, vice president of financial literacy for Money Management International. "You're using current cash available."

Students who make a large number of debit card purchases will need to keep a close watch on their spending or risk overdrawing their account.

They'll also need to keep close tabs on the debit card itself. If a thief gets a hold of a debit card, they can drain your account in no time.

ATM and debit card transactions are protected under the Electronic Fund Transfer Act. But you'll need to act fast to limit your liability for the fraudulent transactions.

To limit your liability to $50, you'll need to report the bogus debit card charges to your bank within two business days. After that, you could be on the hook for as much as $500 in unauthorized charges. (There is a $500 liability limit for up to 60 days after the bank statement reflecting the fraud is mailed to you.)

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Balance Transfer Cards 15.80% --0.00 15.80%
Cash Back Cards 16.42% --0.00 16.42%
Low Interest Cards 11.09% --0.00 11.09%
 
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