Meta-Question: Why is it important for young people to manage their finances well?

[Wildcat]

On 8/17/2018 at 4:12 PM, Quill said:

I have a question about the bolded. I have a joint card with my DD21. I opened this specifically so she could use it while in France (no foreign transaction fees; it is Capital One Venture) and I plan for her to use it this last year of college to buy her groceries and incidentals (no meal plan this year; apartment-style living). Does this build her credit? I have been uncertain if it does or not because she is an authorized user on this card, but I opened the account and the payments come out of my bank account. 

If it helps her credit, though it is jointly owned, I may get DS18 an authorized card on the same card so he can build credit as well. 

 

Since I somehow missed the notification that you quoted me, I'm late to the party. LOL. I'm glad to see that so many others have replied with positive stories.

If your DD pulls her credit report and sees the card on there, she should see that she's an "Authorized User" or even just AU by the card. Even a Credit Karma account should show it on there. If the card shows up, then, yes, it's helping her credit. I believe most major cards report on AUs' files. Honestly, I find it completely strange, but whatev.

What's nice about the AU thing is that you could, for instance, add your ds and you don't need to give him the card. You don't even need to tell him you did it. We gave our kids the cards, however, for emergencies (only had one instance where the child's debit card didn't work but our card did) and to use for gas while off at school since we didn't want them to have their debit cards compromised at the pumps. They are very responsible so we had zero worries about misuse.

There are instances where being a AU on someone's card is hurtful to credit. If the account holder is late on payments or runs high closing balances it can backfire. I think the goal is to be under 30% utilization-- and that is at the time the statement closes each month. If you tap out the credit line but pay it off/down before statement closes, only the closing balance is reported and that is what needs to be under that 30% mark, preferably under 20%.

And, as someone upthread stated (was it Scarlett?), any AU can call that company and request to be removed as an AU for any reason at any time. If it helps your credit, though, it's a nice thing to be an AU!

 

[G5052]

On 8/16/2018 at 11:50 AM, footballmom said:

I would say the #1 reason is because no one has a crystal ball.  Even if your family has money, there are health issues, divorces, etc that can change "the plan".  The only thing they can control is themselves and their spending - they may not have a lot of control on their income - job losses, employment gaps, etc.  

 

I was dirt poor in college putting myself through. Then I was comfortable, and then well off. Then we were poor with our firstborn and another baby. Gradually we came up. Now my monthly income as a single parent is about what it was for our household when I had my firstborn who is in college. I was at orientation for a second job and weighed long-and-hard about even buying a bottle of water late afternoon when I ran out and the drinking fountain was broken. That's where we are.

Real world. Thankfully both of my college students are very frugal and undemanding.

Edited August 22, 2018 by G5052