Consumer Reports: Student money mistakes can be costly
Posted January 6, 2014
College is the launch pad for a whole new world.
As Zach Wollman enters the second semester of his freshman year, his parents hope he's learning a lot, including how to manage his money.
The student loan company Sallie Mae says the number of college students, like Wollman, with credit cards has dropped from 42 percent in 2010 to 30 percent in 2013.
Among those who do have one, 75 percent, carry a balance of $500 or less.
Financial experts say credit cards are OK for college students as long as they are responsible.
"You can co-sign with your child to get a credit card, and you can also request certain spending limits," said Tobie Stanger with Consumer Reports.
As for payments, nearly a quarter of parents pay at least a portion of their student's credit card bill.
So what about debit cards?
Eighty percent of students use one for everyday expenses.
Experts caution to choose debit cards with low fees and to not opt for overdraft protection.
Wollman has a debit card, and his parents put money in his account and track his spending.
He also has credit card for emergencies only.
One advantage to students having credit cards in their own name is they can start to establish credit, but again, they have to be careful not to make mistakes.
Their credit report will always be around.