College Kids Targeted As New Credit Card Users

Do you have a son or daughter in college? If so, they've probably been bombarded with credit card offers.

Credit card issuers are offering a variety of incentives to entice college students into opening accounts. They not only mail to them, they set up tables where college students congregate and give everything from stuffed animals to pizza coupons to CD's to get the kids to fill out an application - right now.

And kids being kids, students often go ahead and do it just to get the goodies. They see it as a no-risk situation. They get the gifts, and after all, don't have to use the cards when they arrive, so there's no cost - they think. If they took the time to read the fine print, in many cases they'd learn differently.

Warn your college student about this - because filling out that application form might not be in their best interests. In fact, it could be costly for them (or you!). Some of those cards will come with a hefty annual fee - added as the first "charge" on their new card. Others come with monthly fees - some as high as $20 per month. Some have both.

Your student might be in for a shock when he or she opens the first letter from the credit card company and finds a statement showing a new balance hovering near $100 - in exchange for that pizza or teddy bear.

Having a credit card on hand is often a good thing for a college student, but the card should be chosen carefully.

First, if the card will be in the student's name only, get a copy of their credit report to see their scores. From there you can determine if they'll be eligible for a "good credit" card or will have to start with a "poor credit" card. If they've had some financial problems, you may have to begin with a secured card, but using it well will help them build a better credit rating.

Once you decide which card is appropriate, do your homework. Or, preferably, get your student to do the homework so he or she will be well aware of the differences and how to make a sound choice.

Compare the annual fee (if any), the monthly fees (if any), the interest rate, the credit line available, and the policies. For instance, do interest charges begin on the day of the charge, or will there be no interest charges when the account is paid in full each month?

After that, look at the rewards - be they gifts for making application, points toward gifts later, or cash back.