Credit card training wheels

I’m a college student, and I think it’s never too early to start establishing your credit. In fact, it is key to build a good credit history in preparation for the future when you are looking to take out a loan to finance a car or a home. Employers may check your credit rating to get a sense of what kind of person they are hiring, so a good rating could project a positive image and take you a long way.

As for college students who are constantly looking for an apartment to rent, landlords may favor you because it shows that you will be more likely to pay your rent on time.

Recently, we received a comment from reader Jeff on guest blogger Chelsea’s post about debit cards:

Our son is off to college this fall, and he’s never had a credit card. Would you suggest that we help him apply for a credit card in his name and a small ($500) credit limit, or should we give him our credit card to use?

This was a particularly timely question, as I’ve just taken off my own credit card training wheelsClick here to learn about third-party website links

See, for the last six months, I’ve had a joint credit card account with my mom to build my credit history. To avoid overspending and to prove to my mom that I was an accountable adult, we agreed that I would only use the credit card on big-ticket items since I already had a debit card for everyday purchases.

Another ground rule we set was that I would pay off the balance in full each month. This reassured her and gave me the opportunity to familiarize myself with the billing cycle and payment process.

Plus, I’ve learned a lot about credit and financial literacy while interning here at Wells Fargo this summer. That, combined with my mom’s guidance, gave me the confidence to take off my training wheels and fly solo. I did some research on which credit card was right for me, applied, and qualified on my own! Now I just need to make sure I continue applying what I’ve learned over the last six months to build my credit responsibly.

What do you think of this training wheels approach to getting your first credit card? Would it work for you?

This entry was posted in College life, Credit, Money management, Parents and tagged , , , . Bookmark the permalink.

13 Responses to Credit card training wheels

  1. Srini says:

    Very useful article and advice to would-be college students.

  2. Julian says:

    I think the training wheels idea is great. It helps students build the positive habits that will allow them to be financial responsible adults. I feel, that too often students who aren’t kept accountable for their finances in college develop bad habits that haunt long into their adult life. Habits are hard to break, so its best to create good ones early. Great post that will hopefully get students, would be students and parents thinking about how to finance the important collegiate years.

  3. A says:

    hey how are you

  4. Alex says:

    What are the options for receiving loan disbursement? Is direct deposit an option?

  5. Nancy says:

    I already have a credit card with Wells Fargo but I just realized that there’s a cash back one. How do I switch? and what other kinds of rewards are there attached to that card?

    • Barbara Raus says:

      Nancy, you can contact Credit Card Customer Service at 1-800-642-4720 to see what reward options are available on your current card. You can inquire about changing cards as well.

  6. D says:

    How does having a joint credit card with your parents work for your credit rating? Does it just improve at a slower pace?

  7. Adele says:

    This is the main reason behind why I’m getting a credit card for college!

  8. Anonymous says:

    I thought a person gets good credit by minimizing the use of credit cards. So in theory if you never use a credit card you will have perfect credit. Is that right?

  9. Delenie Wong says:

    Alex – How your student loan is disbursed will vary by the loan type and school you attend. Most student loan money is sent directly to the school, but some student loans go directly to the borrower. Some of the loans that are sent directly to the borrower may include an electronic disbursement option. Is there a specific loan you were wondering about?

  10. Delenie Wong says:

    Anonymous – There are several ways to build credit history and maintain a good credit score. A lot goes into calculating your credit score and part of it is how much of your available credit you use, so you make a good point about having good credit when minimizing the use of credit cards (Plus, it makes sense to only buy what you can afford with your card). Another part is the types of credit you have, so you may build your credit by getting a credit card, applying for an auto loan or student loan, etc. You can also preserve good credit by having good payment history, being selective about obtaining new credit — like opening credit cards at your favorite retailers, and keeping your oldest accounts open to show established credit history. To find out more about credit, check out the series of posts we did on credit in March of this year — just click on the archives drop down on the right side of the page and choose March 2009.

  11. Delenie Wong says:

    D – Having a joint credit card with my mom allowed me to better understand how my credit card and its billing cycles worked. As an authorized user of the joint account, I was able to build a little bit of my credit history before qualifying for my own credit card. When credit card companies report information about their customers to the credit bureaus, the information is also reported for the authorized user, so I was building my credit while learning how to manage a credit card.

  12. Mila Dorosan says:

    I just could not depart your site before suggesting that I really enjoyed the standard info a person provide for your visitors. I’m gonna be back often in order to check up on new posts

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