Although most college students are officially adults, not all of them are ready for the responsibilities of a credit card. Here are important things to consider when helping them decide whether or not they’re ready for their own.

Ten or twenty years ago, credit cards weren’t much of a problem for most college students. But these days, students are graduating with not just massive student loan debt, but also with credit card debt. According to Nasdaq, the average balance among college students in 2013 was $499, more than most students can pay off in a single month, for certain.

That’s in spite of the fact that the Credit CARD Act bans individuals under 21 from getting a credit card without an adult co-signer or proof they have enough income to pay the bills. That means most college students use debit cards instead of credit cards. But, still, more and more students are looking at credit cards as a viable option.

So how should parents talk to their students about credit cards before they head back to campus this fall? Here’s what you need to know about whether or not your student can get a credit card and how to talk to them about responsible credit card use.

Can College Students Get Credit Cards?

The Credit CARD Act did put restrictions on lenders’ ability to give under-age users a credit card of their own. For one thing, it limits on-campus and near-campus advertising. It also keeps applicants under the age of 21 from getting a card without a co-signer unless they can definitely prove they have the income to make payments on the account.

That said, it’s not impossible for college students to get a credit card, especially if they have even a part-time job. And the temptation may be strong when expenses or wants crop up that a student doesn’t have cash in hand for. Plus, getting a credit card isn’t entirely a bad idea for a college student who wants to build a reasonable credit score. The key is to do it wisely and well.

Should College Students Have a Credit Card?

The answer to this question depends on a lot of factors, including:

• The need to build credit: Students who don’t have student loans won’t have another option for building credit unless they co-sign on another type of loan, like a car loan. So a low-limit credit card can be a good option for building credit. And even if they do have student loans or other installment loans, using credit cards well is one of the best ways to build a higher credit score.
• Their overall financial responsibility: Students who already struggle not to spend money they don’t have or over-spend on things they don’t need may not be well-suited for the responsibility of a credit card. They may need to stick to a budget for a while before venturing into this potentially dangerous territory.
• Other options for emergency funding: A credit card can be a great option for emergency funding if a student gets stranded on the road trip home or needs to get home in a hurry. Booking a rental car or plane ticket is generally easier, and more secure, on a credit card, so it can definitely come in handy for emergencies. There are, however, other options for this, including prepaid cards and debit cards tied to an emergency account.
• Parental oversight: One good reason to get a college student a credit card up front is because you can link yourself, as the parent, to that account. That could mean being a co-signer with access to the account or adding them as an authorized user to your own account. Either way, you could have access to what they’re spending and if they’re paying down the balance in full each month. This gives college students a chance to make small mistakes that won’t have drastic consequences for their future, and it gives you a chance to talk to them about those mistakes.

What Other Options Are Available?

Besides a credit card, what other options are available for college students who either need access to shop online, want to build credit, or both and more? Traditional low-limit credit cards in their own name, generally with a co-signer, are an option. But there are others, too, including:

• An authorized user: If you really want visibility into your college student’s credit card habits, you can add them as an authorized user on your own account. This can let your good credit habits bring up your child’s credit score, and they don’t even have to have a credit card available to spend on. The credit card company will send them a card, but you can always put it away so they can’t actually use it. With this, though, keep in mind that credit mistakes on your part would hurt your child’s credit score. And if you do give your child a card to use for certain expenses, they can spend up to the limit of your overall credit account, and you’ll be responsible for paying it off. So be sure to have that conversation ahead of time.
• Secured credit card: If you want your child to take full responsibility for the credit card situation, consider having them take out a secured credit card for students. This kind of card requires them to put down a deposit, and their limit is secured against that deposit. This means if they miss a payment, the money is there for the credit card company to use. It’s one option for students to get a card completely in their own names, but also be limited in the amount of spending they can do on it.
• Prepaid debit card: College students can also use prepaid debit cards, which can be a great way to transfer money from your account to theirs if you want to give them some spending money while they’re at school. The best prepaid cards have very low fees and let you monitor the spending on the account if you’re the main account holder.
• Regular bank account and debit card: If your student will be working even a little while in college, opening a regular checking account with a debit card can also be a good option. This lets your student manage their own money without spending money they don’t have. The main limitation here is that it may take longer for them to access funds from home if you need to get them emergency money at any point. One way to get around that is to open their account at the same bank where you bank, which can make same-day transfers possible.

Related: Best Student Checking Accounts and Banking Options

5 Credit Card Talking Points for Parents

Regardless of which of these options you think is best, it’s essential that you have a conversation with your college student about credit cards before sending them off to school. All too many college students wind up getting around restrictions and taking out a credit card without ever having someone educate them about the responsibilities–and potential costs–that come with that card.

So before school starts, here are five credit-card related conversations to have with your student:

1. Talk about how APR works and how much it can cost. First and foremost, be sure your student understands how credit card APR works and just how much money it can cost to carry a balance on a credit card. Here’s where online calculators like this one can come in handy. Come up with some scenarios where it might seem reasonable for a teenager or twenty-something to spend money on a credit card–an emergency, back-to-school shopping, books for class, etc. Then put that into a calculator and see how long it would take to pay off that imaginary expense and how much they’d pay in interest over time. Small exercises like this can go a long way!
2. Look at how to make and stick to a budget. If you haven’t already started talking about budgeting with your college student, now is the time. Look at how much income or savings they’ll have to live on while at school, and then discuss potential expenses or wants. Work together to come up with a workable budget, and talk about how they’ll track and stick to the budget over the school year.
3. Discuss different types of credit products and other options. Whether or not to take out a credit card should be a joint decision. Obviously it’s up to you if you co-sign or add your student as an authorized user. But talk to them about other potential options, as well, and work together to figure out the best one for your student’s needs and personality.
4. Talk about how you’ll handle financial emergencies. During these conversations, be sure to talk about how you’d handle potential financial emergencies. What if your student needs to fly home unexpectedly due to a family emergency? Or what if they have car trouble at school or an unexpected medical expense? Talk about where they can get money in a pinch if they truly need it, and come up with a plan for getting that money to them.
5. Set some oversight in place. College is definitely a time when children should start to become more autonomous. But if you’re footing the bill for their education, you can still insist on some financial oversight. This might look like being a co-signer on any credit card accounts, or it might look like budget check-in meetings whenever your student happens to be home. Come up with a plan you can both live with. Just knowing that someone is going to be checking on what they’re doing can be enough to help some students make better choices!

Bottom Line

Getting a credit card is definitely not the worst decision for a college student. In fact, they can be helpful tools for building credit and accessing funds when they most need them. But be sure you’re having consistent conversations about financial products like credit cards and the responsibility they require. And if you do decide that a credit card is a good option for your college student, check out this list of starter credit cards to begin with.

Topics: Credit • Credit Cards • financial planning

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