College credit used to be a way of counting class hours. Now it'sbecome a way of counting students' personal debt. Almost everystudent has a credit card--78 percent of all college students carryat least one card, and the average amount owed is $2,748 according toLowerMyBills.com, a Web site that helps compare the best credit carddeals.
But are students learning the most important lesson: Not onlydoesn't money grow on trees, it doesn't grow on credit cards, either.
With parents and students pending a lot of money on schoolsupplies and clothes in this season, it's a perfect time to teachyour kids some lessons about spending and credit.
And there's a great way to get started.
Visa has come up with a new type of credit card--the Visa BUXXcard--that solves kids' needs for a way to carry their money safelyand parents' needs to control where the teens do their spending.
Reloadable debit card
The Visa BUXX card is a reloadable debit card. That is, parentsdeposit money into an account, and the teen card user can charge upto the amount that's available in the account. Parents can add moremoney on a regular basis for an allowance or whenever the money runslow. That's easily done by transferring money from the parents'checking account or their own regular credit card. And it's a greatway for grandparents to send birthday money instead of a check. Theycan also add to the account balance online.
The student gets the convenience of credit with an automaticspending limit. The card can be used anywhere a Visa card isaccepted. And it can be used to withdraw cash from an ATM.
But the best part is the fact that students and parents can trackspending from this account online, using a secure PersonalIdentification Number. That means Mom and Dad know exactly where themoney is going.
If the college student calls home complaining about the cost ofbooks and supplies, but the parent sees money spent on clothes or atthe campus bar and grill, you can be sure there'll be aconfrontation.
Parents can cancel or suspend the card at any time. And parentscan sign up for an e-mail alert when the card is used at a merchantthat might sell inappropriate materials for teens. That gives somereal control over these independent teens.
There's an educational component to this Visa BUXX card: aworkbook and online quiz that parents can use to teach their childrenabout spending and credit. It's a perfect tool to start teachingteens about tracking spending, setting priorities, and managing moneyusing spending limits. Plus, it's a lot safer for them to carry acredit card than cash.
Online tracking of expenditures
The key to this program is online tracking of spending. You haveto sign up for the card online at www.visabuxx.com. That Web sitewill answer all your questions, as well as giving you direct links toeach of the five national banks that offer these cards. Most chargeonly about $15 per year for the card. It will only take a minute toapply. No credit check is necessary because parents are putting upthe money to fund the account.
We live in an unusual world where kids are granted credit evenbefore they have earnings to justify their ability to repay. Collegestudents are an obvious target, because marketers figure they'll goon to get good jobs. Or their parents will bail them out.
If you don't want to face that prospect in the future, startteaching your children about the wise use of credit right now.
This is the perfect way to get started on a lesson that will lasta lifetime.
And that's The Savage Truth.
Terry Savage is a registered investment adviser and is on theboard of directors of McDonald's Corp. and Pennzoil-Quaker State Co.Send questions via e-mail to savage@suntimes.com. She appears weeklyon WMAQ-Channel 5's 4:30 p.m. newscast.
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