Like most parents, you may want to help your kids build a solid credit rating. But chances are, you also don't want your children to get into debt.
Fortunately, the two goals are not mutually exclusive.
If the recent economic crisis has taught us anything, it's that we absolutely must teach the next generation of young adults (and even teenagers!) how to better manage their finances.Part of the lesson young people need to learn is how to manage credit and debt wisely, starting with a few basic rules, like charging only what they can pay off monthly, keeping debt of all kind to a minimum and learning to separate needs from wants.
In fact, teaching young adults how to properly navigate the world of credit and debt is more important than ever now that the Credit Card Reform Act has limited banks and other credit card issuers' ability to offer plastic to people under the age of 21. Consequently, college students along with recent college grads may find it tougher than ever to build a credit history on their own.
And without an established, positive credit history, it's often difficult to do many things that most people take for granted – like renting or purchasing an automobile, leasing an apartment or even just paying for a hotel room. And having bad credit can even affect you in the workplace.
"The rules of the game have changed when it comes to college students and credit cards. With graduation day right around the corner, it's very important that students, particularly [graduating] seniors, become aware of the various credit options available to them," says Curtis Arnold, CEO of CardRatings.com, a free site for comparing credit card offers.
Editors from CardRatings.com recently surveyed dozens of credit card offers to identify the best-in-class options for college graduates.
Here's a look at CardRatings.com editors' top picks for the Best Credit Cards for College Grads, chosen as the cream of the crop for grads who are moving; those furnishing their first apartment; those with busy social lives who eat out often or see a lot of movies; grads planning to travel; and those simply trying to build their credit history.
Best Credit Card for College Grads on the Move: Discover Open Road Card
According to CardRatings.com, this card features:
- A 0% APR teaser rate (just be sure to pay off the balance before the standard rate kicks in!)
- A 1% percent cash back rebate on all purchases
- Gas and restaurant bonuses, plus a $75 Restaurant.com gift certificate for a limited time
Best Credit Card for College Grads Furnishing a First Apartment - Sony Card from Capital One
CardRatings.com says this card offers:
- Electronics and entertainment rewards
- Bonus points on Sony purchases
- Up to 10 months with 0% APR
Best Credit Card for College Grads Who Love Movies and Dining Out – Citi Forward Card
CardRatings.com editors say this card touts:
- Bonus reward points to use at restaurants, movie theaters and bookstores
- Up to a 2% APR reduction for on-time bill pay
- Extra bonus points for paperless statement sign-up
Best Credit Card for College Grads Heading Off to See the World – Capital One Venture Rewards Credit Card
CardRatings.com cited a slew of travel-related perks for this card:
- No foreign transaction fees
- Miles that don't expire earned on every purchase
- Miles can be used on any airline with no blackout dates
Best Credit Card for College Grads With No Credit – Orchard Bank Classic MasterCard
CardRatings.com notes that this card has credit-building features:
- Email and text message reminders to pay bills and stay within your credit limit
- Regular credit bureau updates that allow college grads to build credit quickly
- Customer service by phone and web that lets grads track purchases and maintain a budget
"This list, as far as I know the first of its kind," says Arnold, "should help guide students through the murky waters of consumer credit well into their adulthood."
Making Early Financial Literacy a Family Priority
Since April is Financial Literacy Month, it's certainly worth taking time to go beyond talking to your children about credit and debt and how to choose the right credit card. Be sure to also let them know about the importance of saving money, starting to invest at a young age and donating money, too.
So many parents wish they'd learned these lessons sooner – and they're now trying to instill early financial education in their children.
According to a recent TD Bank Financial Literacy Survey, 62% of parents agree they should start teaching their children about money by the time their kids are 12 years old.
The TD Bank poll also found that 55% of families say that in light of the recent recession, they are talking to their children more often about money.
Moms are more likely to engage in these everyday financial conversations:
- Teaching children how to count money (81%)
- Teaching money matters while shopping (70%)
- Saving money in a piggy bank (70%)
Meanwhile, dads are more apt to handle the tangible aspects of money:
- Providing an allowance (52%)
- Setting a savings goal (32%)
"The survey shows that each parent contributes different money-related lessons when it comes to a child's financial education," says Suzanne Poole, executive vice president of retail sales strategy for TD Bank. "This indicates that it's important for moms and dads to combine efforts to ensure that their children learn all aspects of financial literacy from monthly budgets to every day spending."