Here are some college credit tips from Erika Vujnovich, a business journalist and mother from Hartsdale who is now a contributor on The Journal News’ Tax Watch team. Her answers to readers’ financial questions will appear twice monthly on the Tax Watch page and online. The Q&A will be titled Mom Knows Money.
High school seniors are weighing anxiously which college to choose and where they will be a part of the class of 2017!
At the same time, parents are beginning to feel the anxiety of sending their not-so little ones off to face new challenges.
One big challenge we often overlook is that of financial discipline.
Are you prepared to offer your child the guidance they need to begin to establish a solid financial profile?
A basic understanding of credit cards is a good start.
- From the Cradle to Credit —Our babies are all grown up and credit card companies recognize that. Although there are laws in place to help protect our children from marketing tactics by companies, parents must educate and explain how irresponsible behavior with credit cards can have serious consequences down the road. If you feel your child is ready to take on the responsibility of a card, help them with the process in order to build good credit, not develop poor spending habits. Teach them that having good credit is essential for so many things including buying that car, applying for a job and even purchasing that first home one day.
- Know the Score —Kids may not realize it, but big brother is keeping score when it comes to credit cards and their spending habits.Credit scores are three-digit numbers indicating a person’s ability to repay a loan on time. The scores range from 300 to the mid-800s and the higher the score, the better. Pay off your credit card debt each month and you’ll get a good score; or think of it as a good grade. Fail to pay on time and you could face financial failure.
- Plastic is Plastic. Right?—Not necessarily. Does your child understand the difference between a credit and debit card? Both can teach responsible spending habits, but they are different. A credit card will have a spending limit and cardholders use the card to pay for things with a promise that they will pay back what was borrowed. Debit cards on the other hand take money directly from a checking account in a bank. Therefore, if your child has a certain amount of money in a bank account, he or she will quickly learn how not to spend something they don’t have.