USAA is a highly competitive financial services company known for its financial strength and outstanding service to its members. USAA owns or
manages assets of $83 billion, and provides insurance, banking, and
investment products to more than 5 million members of the U.S. military
and their families.
Plastic is king on today's college campuses. According to Nellie Mae, an education loan provider, the typical college student has an average of more than four credit cards and more than $2,300 in credit card debt, making "Financial Responsibility 101" one of the most challenging courses their first semester.
Before college freshmen get carried away with their newfound freedom, parents should have a discussion about responsible credit card use, which can go a long way toward protecting the kids' financial security for years to come. Certified Financial PlannerTM practitioners from USAA offer the following ten tips that parents can use to help teach their young adults to use credit responsibly.
Open a single credit card account in both the parents' and child's names, so you can monitor the charges.
Set a low credit limit, such as $500, to keep purchases in check.
Discuss your expectations for which types of credit card purchases are acceptable, and come to an agreement on reasonable monthly spending limits.
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Consider designating the credit card for emergency use only, and encourage using cash for regular purchases.
Discuss the repercussions of obtaining additional credit cards, including the negative effect that applying for multiple cards in a short period of time can have on the applicant's credit score, even if the cards aren't used.
Point out that online purchases should be made only through widely recognized Web sites that use encryption technology on all transactions.
Discourage using the card for cash advances, as the interest charges assigned to these transactions are usually much higher than the card's overall annual percentage rate.
Encourage a thorough monthly review of the credit card statement to ensure the charges are all legitimate.
Minimize the risk of identity theft or prevent further damage by calling the credit card company immediately if the card gets lost or if you suspect fraudulent charges.
Help your kids understand the importance of paying the entire credit card balance with every bill - it's a great habit to start early to help ensure finances stay on solid ground.
USAA is a diversified insurance and financial services organization that has served the military community since 1922.
