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August 5, 2008 6:29 AM

College student credit card: Besides the obvious (temptations to overspend and carry too much debt) is there any good reason for my daughter to not get her first credit card as she leaves for college?

My daughter is 18, and leaving for college. Of course she is getting credit card offers. She is an adult and will make her own decision, but has been discussing whether or not to apply for one of the offered credit cards. So, I ask your input to help her decide. Here's some background:
-She has had a debit card for a couple years, and is pretty good at not overspending.
-Grants, loans, and work will pay her college expenses, so she won't use it for books, food, etc. except maybe in the short term if she has to wait for the other checks to show up.
-Dad's credit is worthless for co-signing, so she will be on her own as far as getting approval. I understand that shouldn't be hard.
-She probably needs to establish credit for her future plans.

Is there anything we are missing as she makes this decision? What would you do differently when starting out? Is there any advantage to just not getting a card at all right now? Your answers will help her make an informed decision. Thank you!

posted by Fuzzy Skinner to work & money (48 comments total)

The obvious one you listed is a sound reason not to get a card.
posted by Laugh_track at 6:40 AM on August 5 [2 favorites]

it would be worthwhile to get a card to help her start establishing credit. however, the obvious reasons you point out are obvious for a reason. even if she is the smartest, most responsible college student ever, it will still be hard to avoid the traps of "free money."

have a serious talk with her about the evils of credit cards and the suckitude that is debt. it really is horrible and stressful and effects all aspects of your life.

perhaps she can get a card with a $200 limit or something low so she doesn't have the temptation or ability to totally go wild.
posted by misanthropicsarah at 6:41 AM on August 5

Does she really have a need or want for a card? I'm a college student and I've never had a credit card. Debit cards are totally the way to go.
posted by saxamo at 6:43 AM on August 5

It's a lot easier to overspend with a credit card than a debit card. That said, there's nothing wrong with paying for her books (or whatever) on the credit card, then paying it all off immediately.

If she does get a card, she should get one with a very low limit, and refuse offers to increase her limit until she knows she won't overspend.
posted by jeather at 6:44 AM on August 5

I was pretty good with money at 18, too (work all summer, make it last all winter), until I got a credit card. Fifteen years later, I'm still un-training myself of the habits that credit card "taught" me.
posted by notsnot at 6:49 AM on August 5

Responsible spending is a lesson that should be learned soon, and if she is as responsible as you say, then a card that has a low limit should be fine. Also, make sure that it's a card that will NOT let you spend above the limit, as opposed to those that will allow you to spend over the limit, but charge you a nasty fee.
Also, I could be wrong, but having a debit card doesn't do anything as far as establishing a credit record goes, and if she wants to get her own apt. after she graduates, or buy a car, or anything of that sort, she should start establishing her credit record now.
posted by jujube at 6:51 AM on August 5

I am 19. I have a credit card at college. I am pretty good about not overspending and pay off my card every month. She won't have any problems getting a card (most credit card companies LOVE to give them to college students), but I will warn you: they don't give you the option to not increase your limit. My limit has quadrupled since I started out but I have done nothing to change it.

Shop around, don't just pick up the first offer you see. And watch the documentary "Maxed Out," which should make her think very carefully about what she really wants.
posted by elisabethjw at 6:53 AM on August 5 [1 favorite]

For the record, I had a credit card throughout college (almost all 7 years) and it wasn't a problem at all. It was very handy.

My college had a credit union - if there's a credit union that she can join, this would be much much better than one of the less customer-centered big credit card companies.

One caveat - she should read _all_ the fine print, and understand every word. She probably won't do this as carefully when she's older, but she should definitely do it now. Things that are obvious to more experienced credit card users won't be to her -- and there are plenty of older adults who are surprised by weird-seeming conditions on their cards. She needs to understand when she'd be paying interest and when not, how cash withdrawals will affect the card terms, when and how the interest rate can change, when she needs to pay by and how to accomplish that, what kinds of protections she has (credit cards often have consumer protections built into them that can be very helpful, but only if you know about them).

She or you may also be able to find some stories online about just how easy it is to slide down that slippery slope; not that she'd be prone to this, but really understanding why some people are so afraid of them could be very helpful.
posted by amtho at 6:56 AM on August 5 [1 favorite]

If she is going to have enough money for books, food, etc., why in the world would she want/need a credit card?
posted by k8t at 6:58 AM on August 5 [1 favorite]

One further note - people keep talking about cards that have a low limit, or that don't "let" you spend over the limit. My belief is this: she should know, at every moment, what her _personal_ limit is, that is, how much she can spend (she should make a budget and review it every month), and what the balance is on the card. A personal finance program like Moneydance is very helpful for this - maybe something like this could be her gift from you.

That combined with knowing the terms of the credit card will mean that she won't be at the mercy of the good will, or "rules", of the card company.
posted by amtho at 7:00 AM on August 5 [1 favorite]

Two reasons why you would want a credit (vs. debit) card:

1) Consumer protections, especially since card numbers can get compromised;

2) Emergencies.
posted by amtho at 7:01 AM on August 5

I had a credit card in college, but the bills went to my parents' house. So it established a credit history, but I never actually used it to buy anything except for things that my parents had specifically said in advance that they would buy for me (for example, when I got a new computer for schoolwork).

I think if I'd been responsible for paying off the bills myself, I might have gone down the dark path of overspending, but knowing that anything I bought would be a burden on my parents kept me from ever really using it.
posted by Greg Nog at 7:03 AM on August 5

She probably needs to establish credit for her future plans

One option is to cosign for the credit card with her, have the statements sent to you, and agree that she will only use it for emergencies and will be responsible for paying it off if she does use it. She will still improve her credit rating by having the account open, but if you're getting the statements she will be less likely to spend it on something she doesn't need or can't afford.
posted by burnmp3s at 7:03 AM on August 5

If she's anything like I was when I was a college student (and every other student I knew), The Obvious is reason enough not to.

amtho makes a good point about why it might be good to have one. But I'd recommend she watch all of Frontline: The Secret History of the Credit Card first (it's all right there online, go ahead).

I somehow managed to make it through college without a credit card, and it's a good thing I didn't have one. I knew the location of every ATM that dispensed cash in $5 increments, and knew exactly how long checks would float before they hit my account.
posted by adamrice at 7:09 AM on August 5

I'm a college student and I have a credit card, but like Greg Nog it gets billed to my parents so I barely use it (although for me, it's because I know whatever I buy I'll have to justify to my parents, whereas I can buy whatever I want on debit).

It's useful in emergencies, though, or if you run into those weird places that seem to think a credit card (and only a credit card) is acceptable ID.
posted by Xany at 7:14 AM on August 5

I got a credit card when I started university and set the limit quite low so I wouldn't be tempted to overspend. It's good to have to order things online, to establish credit, for emergencies, as others have said. I like burnmp3s's idea to have the statements sent to you so you can keep an eye on her spending and she can be responsible for paying it.

If I were her, I would get my card through the bank (preferably one that has an ATM on or close to campus) rather than through random mail offers or kiosks where they give away a free gift with it -- with the bank, you know everything is on the up-and-up and you can set the terms, to a certain extent. My first day of university, I signed up for a card to get the free gift only (ahh, youth) and then cut up the card (I already had a cc from the bank), but didn't cancel it. The credit card company told me when I called for something else, probably at least a year later, that the card was still active. Nothing had happened with it, thankfully, but it was a stupid thing to do. Beware the free gift.
posted by pised at 7:16 AM on August 5

I, too, was a thrifty saver until I hit college and got my first credit card. Years later, I'm still paying it off. A few things to consider:

1. If she's taking out student loans, then she's establishing a credit history, no credit cards necessary. Given that, does she need to assume the additional risk of a credit card?

2. It's really, really tough to keep an eye on your accounts when you're in college. I missed several payments during finals time when I was overwhelmed with work and forgot to process my mail. I also got surprised by unasked-for credit limit increases (like the ones elisabethjw mentions). If your daughter does get a card, she could try:

- Establishing a weekly routine for checking account balances & paying bills. This is extraordinarily easy to do online, and it will prevent her from getting surprised by a credit limit increase.
- Automating accounts. Her bank will probably have some form of online bill-paying available. She can set her account to pay credit card minimums (or the full balance) automatically, so she never gets behind.

3. The APRs offered to college freshmen are insanely high. 20% is totally standard, and some go higher. Amtho is right -- it's worth seeking out a credit union, which will probably have a better rate and a lower limit. She may also be able to find a credit union that offers a debit card plus a small line of credit, which is much more manageable than a full-on credit card.

4. One of the things that made it hard for me to be thrifty at college was the fact that many of the people around me were just far, far richer than me. I don't know if this will be a factor for your daughter, but it certainly was for me. A weekend jaunt to the city? Drinks at the bar for the fifth night in a row? A new hoodie (it looks so good on you, and you know you've been working so hard)? It was nearly impossible to say no to these and a thousand other very reasonable-sounding proposals when all my friends were doing it and the per-item cost was so low. Later, after I'd graduated and started repaying my debts in earnest, I looked back and realized that though I had run up thousands of dollars in debt, most of my transactions were under $40 each. These things may have been perfectly affordable (in fact, cheap) to my friends, but they added up to a totally unmanageable debt for me.

I hope these are helpful points -- I think they're at least worth considering. Good luck to both of you guys!
posted by ourobouros at 7:20 AM on August 5 [1 favorite]

Wow! Tons of great answers already! Thank you!

Maxed Out is indeed a great documentary, which we have watched together. Also, I do not have a credit card, so I know that life can exist without one. It's correct that a debit card does nothing to help establish credit. We'll chat about this tonight, so I appreciate your input.
posted by Fuzzy Skinner at 7:23 AM on August 5

I didn't have a credit card in college, only a debit card and it never was a problem. I'm a big fan of Dave Ramsey (who advocates using no credit cards), and has this to say about teens & credit cards.

The whole "building credit" thing is a lame reason to get a card. For about 3 years before I ever had a CC I had a cell phone under my name that I always paid on time, and that was reported to credit agencies as something in my favor. College is a fantastic time for young people to really start learning how to manage money responsibly, learning how to budget with a limited income, and I think credit cards provide too much temptation to ignore proper money management.

Also, I'll wholeheartedly second a full viewing of that Frontline vid linked above, also the documentary "Maxed Out".
posted by dicaxpuella at 7:31 AM on August 5

There are a lot of deals that are offered to college graduates (mostly car loans/discounts that I can think of off the top) which require that you have no significant past credit history to qualify. As dicaxpuella says, "building credit" is not a good reason to get a card; there will always be time later, there will always be someone willing to extend credit (barring some collapse of the economy), and she may actually be disadvantaged by having an established credit record.
posted by katemonster at 7:38 AM on August 5

I disagree somewhat with katemonster. I say, it's worth it to get like a $200 limit credit card, and just don't use it. (But, remember to check the account periodically to watch out for ID theft/fraud.) That builds your credit rating pretty much risk-free.

Also, if you were going to do this, go with your favorite bank where you already have business, or apply independently. Don't take any of the on-campus offers. They're pretty much all financial deathtraps.
posted by Citrus at 7:46 AM on August 5

I'll add that I've had a credit card since I entered college (signed up the first day, got the tshirt!), and I have always paid on time. 8 years since my first credit card, I have high 700 FICO scores, and the only credit I've taken on were my credit cards -- no car loans, nothing.

I'm now in the market to buy a house. I'm in a much better place with mortgage-rates due to my excellent credit, all thanks to my credit cards and responsible spending.

There are a lot of deals that are offered to college graduates (mostly car loans/discounts that I can think of off the top) which require that you have no significant past credit history to qualify.

I graduated college 4 years ago, made major purchases, and never once did I, nor any of the recent college graduates I lived with, receive any offer that penalized you for having a credit history. That is preposterous. The only way to make money off someone with a poor credit history (and thus high risk) is to milk them through fees or high interest rates. Any marketing to people with 'poor' or 'no' credit will be a ripoff compared to what someone with good credit can receive on the open market.
posted by Geckwoistmeinauto at 7:48 AM on August 5

I had one in college and did fine. I "got it" that it wasn't free money. I still bought stuff I shouldn't have, but didn't go nuts, and I learned. They have to learn sometime, and college is where they start learning to be independent anyway.

While it's good that debit cards don't let you spend more than you have, I think that it's safer to buy things with credit than with debit. If somebody compromises your debit card, the money is gone. If you buy something and need to dispute, the money is gone. With credit, you have a layer of protection (have these things changed in recent years?). I'd never use my debit card online, for example. You can also get points, miles, or cash back. And if you pay it off in full each month, it's free (assuming no annual fees), and the points/miles/cash are gravy.

You could always delay it a year. Have her work with checkbook and debit for a year, make sure she's got the basics of that, of independently managing money and paying bills, and then kick in the credit card. She can get by without it, but I think it's a good thing to have, if only for emergencies (=/= fashion emergencies!) but also for the other reasons mentioned.
posted by Askr at 8:02 AM on August 5 [1 favorite]

If she is going to have enough money for books, food, etc., why in the world would she want/need a credit card?

1) Car rental works best with a credit card

2) When pulling up my annual credit report, it's fun seeing a 20 year credit history now.

3) Cards with a 1% cashback kickback are nice, eg. getting $5 back for a term's book load.
posted by yort at 8:21 AM on August 5

Someone will always give you credit. I never had a credit card until my last semester of college which by then I had a full time job lined up in the summer. Just use the debit card and that will teach her to stay on a budget since its ~$31 for $0. They even let you accumulate points on debit cards now.

I would say the only other benefits would be 1. use in an emergency (when she would need to ask you for cash most likely anyway) and 2. consumer protection.

As mentioned above, I would delay for a period of time where she understands the consequences that she does not necessarily understand at 18.
posted by thetenthstory at 8:22 AM on August 5

I'm in the 'emergency only' camp. Get it with a low limit, put it in her wallet and forget it. But (for example) in the off chance she finds herself in a weird situation where she just needs to get the hell outta there, but doesn't have cab money and shouldn't be driving, she can still get home without being put into a sketchy situation (driving when she's been drinking, driving with others who have been drinking, out with a guy who she no longer feels comfortable with, etc).

Of course, you'll need to make sure she doesn't use it for non-emergencies ( "But dad, it *was* an emergency; I needed the iPhone for my classes!") Maybe have the bills sent back home, so you're the one seeing them first?
posted by cgg at 8:24 AM on August 5

I had a card when I was in school - and I think it's a good idea. It helped me to establish credit and it taught me how to be responsible with a credit card. It's a great idea to start this before she goes off to school (she might get one on her own when she's there anyway), since it gives you the opportunity to really talk to her about how credit works. Credit is pretty important and I think it's worth it to start her while you have her as a captive audience and can really indoctrinate her on credit responsibility. Also, it's worth it for her to have it for the occasional emergency - i.e. drunken cab ride home.

Absolutely make an agreement about what you'll pay and what she'll pay so that it is completely payed off every month. Definately sit her down with the statement and walk her through everything. Minimum payment is not the real balance - etc.

As another data point I knew someone that got a card when they were in college and didn't tell their parents about it until they were 15k in the hole. Their parents had to cosign for a loan to pay it off to help her not totally ruin her credit in the medium term.
posted by Craig at 8:47 AM on August 5

I had a CC in college like Greg Nog and Xany describe- the bill went to my father, so I had to justify every expense that went on it. The upshot is that I didn't use it for "shopping", but it was extremely handy for things like books and fees.
posted by mkultra at 8:49 AM on August 5

Just to add to the anecdote camp: I got my first credit card when I turned 18 while a first year in college. Only you and your daughter know how responsible she is, but when I signed up for the card I did it with the personal rule that I would never, never, ever carry a balance. I was just too cheap - no way was I going to pay double or triple for my stuff just because I missed a payment and had to pay interest. I also had an emergency slush fund in my savings account from a summer job, so that on the occasion I accidentally overspent (or decided I really wanted to overspend), I had the cash on hand to still pay the card off at the end of the month.

There were two main benefits to the card for me - rewards and no need for cash. It's always fun to get a gift card to spend frivolously just for buying the things I would have bought anyway, and I always hate to carry too much cash. I suppose you could get away with not carrying cash by using a debit card, but I was always worried about having my debit card stolen, my account emptied, and then having to wait around for the bank to process things so I could get my money back. With a credit card there's no such worry.

Five years later, I've still never carried a balance and I get a nice gift card from my Amazon Visa every couple of months. Like I said, only your daughter know how much self control she has - but if she can refrain from carrying a balance and ignore all the other junk incentives that credit cards offer, I think they're great.
posted by CtrlAltDelete at 8:54 AM on August 5

I'm now in the market to buy a house. I'm in a much better place with mortgage-rates due to my excellent credit, all thanks to my credit cards and responsible spending

I didn't want to make my initial question too long, but this is part of why I posted. She is engaged, and they are planning on getting married in 2 or 3 years. (I'm betting it's sooner.) They are both in the same school. I don't think it will be out of the realm of possibility that house-hunting might start soon after school.

As far as the comments about the on-campus offers: that's one reason I'm trying to have her deal with it now. It's probably better to set it up now, either through our bank or another company, rather than go to some business fair at school and get talked into a bad deal because of being put in a drawing for Fabulous Prizes, or getting a "free" stuffed Montana Griz mascot.

As these excellent anwers show, it's not a simple either/or proposition. They will serve as great discussion points.
posted by Fuzzy Skinner at 8:58 AM on August 5

I tend to go against the grain of credit card-ery, and think they're perfectly fine to have.

However, I treat my credit card like a convenient form of cash--if I don't have it, it doesn't get spent. If she treats her credit card the same way she treats her debit card, she shouldn't have any problems. Credit cards are not free money, and as long as she knows that, and if she treats it as something to pay off every month in full, it can help with her credit. If she gets a card with some variety of benefit (cash back, points, etc), uses it regularly like she would her debit card, and pays it off every month, she can get a monetary benefit from having the card.

I didn't get a credit card until after I graduated, and it did lead me to some problems with things like getting the utility companies to let me have utilities in my name. It was also harder for me to get a credit card without any prior credit.

I never thought of credit cards as free money, because they aren't. If you manage to get your daughter in that mindset as well (credit cards != free money), she'll be fine. Also a good practice is having a buffer in your bank account, $500, $1000. I had constantly ingrained in me that less than $1000 in a checking account is an awful thing, akin to overdrafting (but without the fees!). Maybe you don't believe this is a good idea, yourself, but having that buffer can help you out in a lot of hard times.
posted by that girl at 9:06 AM on August 5 [1 favorite]

If your daughter goes for a CC, I would suggest visiting her bank and seeing what offers they have, rather than the various offers that come in the mail. It's always nice to have a representative explain the terms and conditions, and if she has any questions, they will be answered.

Since I'm not a seasoned pro on CCs - in fact, I got my first credit card just two weeks ago - I can't give much advice, but one thing I'm doing is tucking that CC in some obscure place in my wallet that isn't easily accessible. That way, I wouldn't be so tempted to whip it out. Another way is thinking it is a debit card instead. Yeah, that might be weird, but thinking that way helps me impose a limit on myself on how much I can reasonably spend.
posted by curagea at 9:13 AM on August 5

k8t writes "If she is going to have enough money for books, food, etc., why in the world would she want/need a credit card?"

Consumer protection for internet purchases.
posted by Mitheral at 9:21 AM on August 5

I'm also in the camp of getting one to start building credit history. I've had one since I was a senior in HS, and up until I was 21. The bill was sent to my parents so I was forced to justify my spending (after reading other comments, I see they weren't completely crazy now!). When I got my "own" card whose bill was sent to myself, those habits thankfully filled over and I treat my CC like a debit card still. It also helped when getting car loans and though I didn't buy a house, I was in the marker last year and got good offers with my credit rating.

Also think of it this way: Is it better for you to involved in the whole CC process and try to teach good CC spending habits, or say no and chance her running off and getting one anyways? The abundant chances to get one on campus is well documented.

As another data point I knew someone that got a card when they were in college and didn't tell their parents about it until they were 15k in the hole. Their parents had to cosign for a loan to pay it off to help her not totally ruin her credit in the medium term.

This happened to a good friend and to a lesser extent, my brother and his wife.
posted by jmd82 at 9:31 AM on August 5

Besides the obvious (temptations to overspend and carry too much debt) is there any good reason for my daughter to not get her first credit card as she leaves for college?

The main other one I can think of is late fees if she misses her payments-- even if she is willing and able to pay off her bills each month, late fees can really add up. Everyone's got to learn to pay bills on time somehow, but credit cards are a particularly costly learning experience.
posted by EmilyClimbs at 9:33 AM on August 5

My parents had trouble getting a bank to agree to give them their first credit card when they finished school in the mid-90s with no credit history, so they encouraged me to get a credit card as I began college. I'm two years out of college and in grad school (aka quite poor) now, and I've paid my card off in full every month. My credit limit increased from the initial $500 to something ridiculously large now, but I don't go anywhere near that. I do use the card to pay for as much as possible, because I get points that are good for Amazon gift certificates. I also got an offer a couple of years ago that let me take a few thousand out for a few months with 0% interest, so I put the money in a CD and earned a couple hundred dollars by doing nothing.

I do my banking online, and looking at my purchase history for the month makes me more responsible with my spending. It does a better job of keeping track of where I spent my money than I would myself, and I can see what I need to change. Cash may be gone when it's gone, but there's no record of where it went.

I think the most important thing was that responsible credit card use was something my parents discussed with me often.
posted by capsizing at 10:44 AM on August 5

You listed the two top reasons why she SHOULDN'T do a card. I worked for Discover Card and your kid is a prime target for overspending and getting screwed, whether you believe it or not.

She has enough debt with school loans. Let her keep the debit card and use that. I mean, seriously, do you think she's going to immediately buy a house out of college? Let her work and then consider a credit card. Plus she may get better rates instead of being seen as a prime target.
posted by dasheekeejones at 10:45 AM on August 5

Another here who went all of university without having a credit card. If you're concerned about emergencies, you could do what my mother and I did---we kept a joint account open that had bank branches in both our towns. That way if I really needed money, mom could deposit it in that account and it would be available by the next day.
posted by lacedback at 11:35 AM on August 5

I had a credit card when I went to college. The bills went to my mom's house, and I never used it unless there was an emergency or my mom had pre-approved the purchase. Now I have great credit, and the loans that I just took out are a good deal for me because of that.

If she starts overspending, you'll see it right away if you're getting the bills. Just have a zero tolerance policy - one big statement, and the card is canceled.
posted by prefpara at 12:55 PM on August 5

Establishing a credit history and having the ability to dispute charges are both really nice features of credit cards as opposed to debit cards. Why not get a credit card and use it like a debit card? Many credit cards (e.g. Chase and Citibank) can be set up to automatically pay the full balance every month from your bank account. If you and your daughter set the card up to do this before she uses it, and assuming that she really agrees with you that it'd be a bad idea ever to carry a balance, there's no further problem.
posted by RogerB at 1:03 PM on August 5

We got my son a low limit credit card on which he COULD NOT go over the limit, which guaranteed no raising of the limit for 12 months, and had the bills come to us. He was to use this for direct school expenses like books (so that he didn't have to use his limited living cash on books and other academic expenses) and travel home, that were part of what we were paying for.

This system worked great. He had the credit he needed, wasn't able to rely on the card, and we could police it. After a year we turned it over to him, and he just let us know when there was a charge we should cover, for instance for books. He's a really responsible kid with simple needs, YMMV.

You can retain as much or as little control over your kids' credit, even if they are not minors, as you need to. There are lots of products out there.

The thing is, your young adult is going to have a credit card. It is absurd not to teach her responsible use of it while you still have some pretension to control.
posted by nax at 1:59 PM on August 5

I'll mark some best answers in a bit... excellent input by everyone. I'll make sure she sees all of this and we discuss it. I do agree with nax that, indeed, she will have a credit card at some point; it's just how the world works, for better or worse. Like any adult responsibility, there are dangers and pitfalls along with the positive.

Thanks to everyone for taking the time to share your thoughts and experiences.
posted by Fuzzy Skinner at 5:30 PM on August 5

She should definitely get a credit card while she's getting offers.

I didn't get a credit card as a student to all the fear mongering about debt and interest rates. This served me horribly just a few years later when I was trying to get a cell phone and utilities in my name. I had to pay huge deposits and I had trouble finding a company that would let me get a cell phone AT ALL. (This was back in the days of credit checks and contracts with cell phones, so you probably would not have this problem now, but still.) I tried to get a credit card through my bank and was denied despite having had an account there since I was sixteen. I had a decent amount of money in the bank as well as a savings account. It didn't matter, since I had no credit history. Someone who had declared bankruptcy would have had an easier time than I did. If I'd needed to pass a credit check to get an apartment or get a loan I would have been SOL. I finally had my father cosign on a credit card so I could start building credit. It sucked because I no longer lived at home and wanted to be totally independent.

I have two credit cards. One is the same card I had my father cosign on way back when. I have never carried a balance on either of them, and I've never had any kind of debt.
posted by Violet Hour at 9:26 PM on August 5

Do not. I repeat. DO NOT listen to anyone who says not to get one (or preferably three) credit cards. The sooner your daughter has them, the sooner she will either:

a) have good credit and the advantages that come with it
b) fuck up horribly, ruin her credit, learn her lessons, and come back to 'a' several years later

My card averse friends learned the value of credit history when they went to buy houses and ended up paying too much. They wouldn't believe they weren't getting screwed on interest or that other people didn't have to pay utility deposits. Sometimes they'd even say "it's worth it not to have the temptation." One of them even had a couple of PIF 100% on time car loans, but still ended up paying several percent too much.

Now that they're spending tens (or hundreds in one case) of thousands too much over their 15/30 year mortgages, they all have credit cards and they almost all use them responsibly.

If she does end up getting a card, it would be best if she got one from an issuer that can draft minimum payments from her/your checking automatically. I know from experience that Chase and Bank of America both do this easily from their website. Citi, WaMu, and HSBC all require you send in paper forms.

If she is paying the card off each month, she will still develop good payment habits from the routine of paying the rest of the balance each month.
posted by wierdo at 9:39 PM on August 5

It's important for her future that she have good credit, and one item that credit scoring agencies tend to take seriously is the length of time you've had credit available to you. Get her set up with a no-annual-fee credit card; if you are worried about her abusing the card, cut it up and toss the pieces, but don't cancel the account. She gets much of the benefit of holding a credit card just by leaving the account open, even if she never swipes the physical card.
posted by UrbanEconomist at 5:41 AM on August 6

Thanks again for all the answers. I marked Best Answer on the ones that I think might be most helpful for someone browsing this thread in the future. All the answers worked together to give a good overall view of the many issues to be considered.

For posterity, here's how things stand as of my last conversation with my daughter:
We are going to look at the offers and talk to our bank before she leaves, and apply for a card that seems to work best for her. The suggestions to have an additonal card on a parent's account are excellent, but for reasons I can't go into here, that just won't work in our case. She will be essentially 100% responsible for her own financial decisions. Thankfully, she does seek my advice, and nearly always follows it. The checking account that her debit card is linked to is linked to mine. I can move money from my account to hers online, and it's available to her instantly. So in cases where she needs something that I can cover, that will avoid using the credit card. On the other hand, my funds are very limited, and in the case of a true emergency, having credit available will be essential.

Establishing a good credit rating is indeed important, and that will never change. The idea of her getting a card now, while I do have some influence, is probably the best tactic. Additionally, living on-campus is a much more controlled environment than living off-campus. (Wild party joking aside.) Since her daily expenses will be covered by her meal program, and her living expenses covered by dorm fees, she won't be charging meals on the credit card, and end up paying interest on a Big Mac for the next 10 years.

Thanks again, everyone! Getting a kid out of the nest is never easy, but they have to sprout wings sometime!
posted by Fuzzy Skinner at 8:35 AM on August 6

BTW, major kudos to you for taking this seriously, being proactive, and (most importantly) working with your daughter on this.
posted by mkultra at 8:50 AM on August 6

Thanks, mkultra!
posted by Fuzzy Skinner at 12:28 PM on August 6