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How did I end up with all these?

How did I end up with all these?

“Just for an emergency (!)”

That is what many parents tell their college-bound progeny as they hand them their first credit card. “You know, in case you need a cab home, or have to buy an unexpected textbook.” Yeah, right.

I passed along a credit card to my college age son when he was a junior, but had to retrieve it from him after a few good months of restricted use when I started noticing things like Boulder bar bills, vague web purchases and, finally, the coup d’ grace of a $50 haircut (leisurely shave included, as I found out later). Plastic, as we all have learned, is insidious, meaning its use sneaks up on you like a money-munching marmot, nibbling away at your wallet month after month, year after year.

Want to give your kids a really good visual lesson in the true costs of running balances on the credit card? Go to money advice and play with their credit card balance (you might want to try yours–if you’ve got the stomach for it). They will be amazed, as I always am, when they see the depressing results of the so called minimum monthly payment.

But, the kids are not entirely at fault. First, ask yourself how much time you have put in to teaching them about credit cards and the dangers of their use. 91% of colllege students now have a credit card when they graduate. The average number of cards per student? Four. Most of these kids are learning about the cards “on the fly.” Next, consider the fact that universities and colleges actually encourage free distribution charges and can even get paid for it. Michigan State University today announced a change in their credit card solicitation policy, which would prohibit the Bank of America and, now, the University, from cashing in on the sale of B of A credit cards to the tune of $8.4 million over seven years. That leaves only the University of Michigan in that state that still profits from collaborating with credit card companies, though the practice is widespread, possibly even at your own son’s or daughter’s school.

Advice? Well for a full account try this CBS News report or from last summer or check here at Consumers Union. But, the basics for college kids are pretty simple:

• a credit card is a tool, not a cash machine; whatever you spend, you owe
• get one credit card, just one, and practice leaving it at home and using cash instead
• if you can’t payoff your balance every month, don’t use it; monthly payments can kill your budget
• if you have a self-control issue, get a credit card with a limit, say $500–limit the damage