Should my college student have a credit card?

College is a great opportunity for students to begin honing their money management skills and building credit. Learn the pros and cons of a credit card, plus how to help them build credit responsibly. 

For many students, college is the first time they will live and manage their finances independently. While the majority of first-year students don’t have a credit card, 63 percent of upperclassmen use a card as their primary means of payment, according to a study by Sallie Mae.

A credit card comes with temptation, but it’s a great opportunity for students to establish and build credit – which they’ll need to buy a car or rent an apartment after graduating. Equally important, a credit card teaches your child about essential money management skills; they’ll need to spend responsibility, stick to a budget and pay bills on time.

U.S. Bank Campus Branch Manager Megan Johnson works with students and parents every school year to figure out the right option for them. She explains, “It’s very important for students to have a credit card and build credit. College kids are responsible, and they crave money management tools that they may not have received in high school. They’re researching themselves and hungry to build credit.”

Remember that you know your student best. As the parent, the decision to provide your student with a credit card means a commitment from you too – be prepared to help your child review payments, ensure the bills get paid and talk about budgeting. 

How can I help my college student build credit?

If building credit is a priority for your student, a debit card or prepaid card won’t do the trick. Thankfully, you have options to give your student different levels of control, so you can decide which card is the best fit for your family.

Have your student open their own card (under their name).

Most card issuers have minimum age requirements — often 18 years or over — for student credit cards. If your student meets this threshold, having their name (and only their name) is a possibility. The card can build their credit. But, if the card is used badly, it’s also an opportunity for your student to hurt their credit. 

“From a lending perspective – when it comes to being a good candidate for a loan – having their name on the card is important. It’s scary for parents, but students love the opportunity to earn rewards to pay for eating out and traveling home,” says Johnson. If your child has their own credit card, you may also want to consider opening their own checking account for convenient payments. 

Add your student to your card.

If you’d rather supervise, you can add your student as an authorized user of a card in your name, or you can apply for a card as co-applicants. In either instance, you’ll have full access to the statements. But whatever happens (good or bad) on the account will be noted in your credit score as well as your student’s.

Consider a credit-building card. 

Want to set more limits? Using a credit-building card like the U. S. Bank Secured Visa® Card ¹ helps your child establish credit because the card is backed by a refundable deposit that determines the amount of credit available on the card, with payments reported to credit bureaus. “Most kids set a limit of $300-$500 to get started, with the plan to ‘graduate’ to a traditional credit card after a year. Students can earn rewards, too!” says Anne Haugen, a U.S. Bank Relationship Manager for Campus Partnerships.

How can I help my student use their credit card responsibly?

Sit down and have a conversation with your child about responsible spending and money management. Johnson’s go-to advice for students emphasizes a responsible-spending mindset: “I tell students all the time that if you wouldn’t purchase something with your debit card, don’t purchase it on your credit card.”

Here are a few additional tips:

• Explain basic money terms - Explain the difference between a minimum payment and the balance
• Plan for paying bills - Put a system in place for checking their balance regularly and paying on time. Consider setting up auto pay but still encouraging your student to pay off their expenses sooner.
• Set a budget – Your student will need to understand how much money they can spend. Students may not have a big enough income to cover their expenses, especially if they have their own checking account. In that case, you might prefer to supplement essential items like books and food. Tools like Zelle® can be great for seamlessly sending money.
• Make payments easy – Students are always on their devices, so you can’t go wrong with digital payments.  With mobile and online banking, your student can make payments during study breaks and benefit from personalized notifications, automatic bill pay, and even expense trackers.
• Talk about what will happen if your student doesn’t spend responsibly - Decide what happens if your student gets in over their head. Will you step in? Set clear expectations ahead of time so your student – and you – know what to expect. 

Learn more about credit card options for students.