The answer to that question will vary depending on the college student.
If your student never had a credit card before, it’s not a good idea to pack the freshman off to school carrying the temptation of an unsecured credit card. On the other hand, if your student maintained a part-time job in high school and showed responsibility managing money, I can offer some good reasons to trust that freshman with a carefully chosen credit card.
If your child goes off to college, it’s only natural for a parent to want to try to cushion the impact of a financial emergency. If a tire blows out when they’re heading home at the end of a semester, you want them to get it fixed and get back on the road quickly.
I recommend two approaches to account for an emergency, depending on the student’s money smarts.
If your freshman hasn’t had much experience managing money, you should help them set up a checking account with a debit card that is distinct from the account they use for school expenses. This should have an agreed-upon balance sufficient to pay for meals out, movies and other entertainment, as well as a cushion against minor emergencies.
If your new college student is constantly drawing the balance of this account down to zero, you’ll know it’s time to have a serious talk about responsible handling of money. Make clear you are unwilling to sponsor a bottomless bank account.
And you’ll know some maturing needs to take place before your student is ready for an unsecured credit card.
But if your student earned and saved money while in high school, responsibly maintained a checking account, or otherwise showed they are “good with money,” you may want to help them establish credit as part of their growth in college.
I recommend setting up a credit card through co-signing, so parents and student see statements. When a parent’s name appears on a card along with the student’s, it sends a cautionary message when a child presents it at the cash register.
Of course, if your student is old enough, or can prove to a credit card company they make enough income to be credit-worthy, they can make the decision to open an account on their own.
If they decide to open their own account, you can still offer advice to limit the chances they’ll do financial harm to themselves. I would advise my child to restrict their available credit to no more than $500. A limit of thousands of dollars is just asking for trouble.
And if your student does take on too much debt while away at college, it’s not the end of the world. It can be a valuable lesson to learn from a small debt mistake at a young age instead of living with a big one 20 years later.