Student Credit Cards: Terms to Know
When your child heads off to college, it can be a difficult financial time for both of you. One way to address this issue may be to open a credit account for him or her. This can help your child cover basic expenses while building up the credit score he or she needs to rent an apartment, buy a car, or own a house. However, there are also many potential risks that must be carefully considered.
If you are thinking about obtaining a credit card for your child, you need to be fully informed about your options and their implications. A good starting place is a review of common terms and their definitions:
Joint Account: An account that is shared between two or more people. All the persons on the account have access to it and are liable for everything on it, such as fees, defaults and overdrafts.
Co-signer: A person who signs a loan in place of another person with bad or no credit.
Additional card holder: An extra person on your credit card account. The additional person will get an extra credit card to use and the main card holder will be responsible for paying off the charges.
Piggybacking: A “piggy backer” on your credit card is able to use your credit card and take advantage of your good credit without having to build up any of their own. This is a practice commonly used with parents and their children.
Having a credit card is a big responsibility on anyone’s part, especially for a young adult about to enter college. However, with the right information, it can be a rewarding experience for a college student.
Unfortunately, mismanagement of a student credit card can create severe financial problems for young adults with little “real world” experience. If you are struggling with significant debts, bankruptcy may be a viable option. For a consultation with an experienced Birmingham bankruptcy lawyer, please contact Greenway Bankruptcy Law, LLC at (205) 324-4000.