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Why Creditors are now Turning to Parents for Student Credit Cards

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Getting a student credit card used to be as simple as turning the corner of any college campus. Creditors used to camp out and lure students in with special offers and free gifts.

However, given the recent changes to certain credit card laws through the CARD Act, students can no longer just snag a credit card the day they turn 18. In fact, creditors are only granting credit cards to college students if they can prove they have a source of income sufficient enough to pay their bills.

Unless, of course, students get a co-signer; in particular, their parents need to co-sign for the credit card.

A New Approach

As always, creditors have found ways to get around challenges, and student credit cards are no exception. Creditors are now targeting parents of college students for student creditors. In fact, you can be certain that student credit cards will start coming your way if you have a college student under the age of 21.

Parents are now being targeted by creditors because creditors know that parents will be the ones to determine whether their children will receive a student credit card. In particular, many creditors are targeting parents who already have credit cards through a particular credit card company and asking them to take on an additional account in the name of their student.

This direct mail approach may be a highly successful endeavor for credit card companies, as they can avoid marketing to students but nevertheless get to them through their parents.

Should you help your Child get a Student Credit Card?

If you are a parent of a college student, you will want to strongly consider whether it is time for your child to possess a student credit card, as ultimately the student credit card will affect your credit score if payments are not made.

There is no time like the present to teach your child responsible credit card habits, regardless of whether they are college students or not. Take the time to talk to your child about the importance of building a strong credit history, as a student credit card will be able to allow your child to begin building his or her credit history, so that he or she can have a strong credit score by the time college graduation rolls around.

When Co-Signing for a Credit Card may not be the Best Idea

Introduction

You may be approached by a loved one asking you to co-sign for a credit card, and you may have difficulty deciding if this is the best decision to make. So, what do you do?

For many individuals, the idea of co-signing is met with a great deal of trepidation, and rightly so. After all, you are just as responsible for the credit card bill as your loved one is. So, if they fail to pay the bill, guess who’s responsible? And, if they act irresponsibly with the credit card, guess whose credit score will suffer?

It is because of the above reasons that you must seriously consider whether co-signing for a loved one is the best idea. Here are a few situations where you may want to decline a request to co-sign for a credit card:

• Your loved one has a shaky employment history – The bottom line is that the only way to pay for a credit card is by working, and if your loved one is not currently employed, or has a habit of moving from job to job, co-signing for a credit card may not be in your best interest.
• Your loved one has a poor history – or no history – of handling credit – For most individuals, there’s a good reason why they can’t obtain credit, and it usually has to do with poor credit mistakes in the past. If your loved one has never handled credit, this may also be a warning sign for you to decline co-signing for the card. If there were legitimate circumstances under which your loved one’s credit was damaged (the loss of a spouse, a divorce) then you may feel better co-signing for a credit card.
• Your loved one has a history of making bad decisions – If your loved one made rash purchases in the past that they could not afford then you must ask yourself what is preventing them from doing the same thing if you co-sign for a credit card? Your loved one may make all the promises in the world, but in the end it is their actions that speak much louder than their words.