With many colleges starting in early September, many families may still be considering how best to give their kids some spending power while they’re away at school.
If the plan is to extend those kids access to an existing credit card account, or to grant them one of their own, then experts warn caution must be used, according to a report from the Associated Press. Often, college kids with some amount of financial and personal independence for the first time in their lives may make missteps that lead to lots of credit card debt they may not necessarily be equipped to handle.
Parents have the option of making their kids authorized users on their own accounts, or can co-sign on a new account in the child’s name, the report said. Thanks to new consumer protection laws passed last year, consumers under the age of 21 cannot open credit card accounts without having an adult co-signer or providing adequate proof they can afford to pay their bills by themselves.
Recent studies show the average college student now graduates with several credit cards and a few thousand dollars in debt.