04 Nov Should my college student have a credit card?

Q. My daughter started college this fall. She has a debit card linked to a checking account that we own together. The debit card can act as a credit card, but I know there are times using a credit card is better. Should she get a card?
— Dad

A. It’s great to start building a credit history when a consumer is young, but not without some lessons on how credit works.

Your daughter probably should have a credit card because while a debit card is usually processed like a credit card, if the cash is not available in the underlying account, the transaction will be declined, said Alison Williams, a certified financial planner with Stonegate Wealth Management in Oakland.

That’s when she’ll get hit with all kinds of bank fees, and risk that other checks written against the account could bounce.

But, if she gets a credit card, it should be only for emergencies.

You didn’t say what the checking account balance was, or how that balance is replenished, but it’s safe to say that her day-to-day spending should be easy to track, Williams said.

However, if there is a large expenditure, such as if her car breaks down, having that additional credit available may come in handy, Williams said.

But be careful.

“Credit card companies are notorious for targeting recent high school graduates,” Williams said. “Do a little research. When possible, steer clear of high interest rates and exorbitantly large credit lines.”

Because most 18-year-olds have a very limited credit history, you may not have many choices in a card.

You may be able to mitigate some less desirables by co-signing on the credit card, similar to what you have done with the bank account, Williams said.

“The catch to that is you’re on the hook if the card is misused,” she said.

Adding your daughter as an authorized user on your card is another option.

Take this moment to talk to your daughter about the dangers of overcharging on a credit card. As long as it’s made clear that the credit card is for emergencies only, having one is a good idea. She’ll have access to credit if she needs it, and she will establish a credit history that’s sure to come in handy in the future, Williams said.

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This story was first posted in November 2015.