Helping Gen Y Get a Handle on Credit Cards

The Buxx is an excellent tool for teaching a student about the virtues of budgeting and financial responsibility. Plus, monthly paper statements and/or timely Internet updates allow parents to monitor their spending and make sure the money is spent at the campus bookstore, not the campus bar.

Visa offers teen-friendly information on its Web site (visabuxx.com), which is also an excellent educational tool for first time credit card carriers. It includes information on interest, financial goals and various investment vehicles, and is a worthy read for credit cardholders, new and old.

When applying for the Buxx card, parents and teens can test their financial skills with an assessment test that is on the site to determine the financial literacy of the teen, and to encourage family dialogue about money management and financial responsibility.

Pick a Card

The next best card for students is the Citi Cash Card, offered by Citibank. The Citi Cash Card is a pre-paid, reloadable card that is accepted at most retailers. The minimum age to apply for the card is 16.

The card will then be in the child's name, and they will be legally responsible for the account, including the task of loading money onto the card from their checking or savings account, or from a credit or debit card. However, the Citi Cash Card does not come with the same, extensive credit literacy material that the Buxx card does and is therefore not as financially rewarding for students. The Citi Cash Card costs $25 a year.

Next in line is MasterCard's version of the Visa Buxx card, also known as the i-GEN card. Originally, the i-GEN card was targeted at teens who shopped online, but now, through their partnership with Next Estate Communications, the card is sold at more than 10,000 brick and mortar retailers across the country.

The premise of the i-GEN card is similar to the Citi Cash Card, except there is no application to complete. No application also means no educational opportunity, so be sure to talk to your children first before turning them lose with the card.

The i-GEN card costs around $10.50 and comes with a monthly fee of $4.95. In addition, it costs $2.50 every time you use it in an ATM-on top of whatever the local ATM charges.

Long Distance Credit Checks

An alternative to the pre-paid route and credit cards with high credit lines, is to set-up a College Parents of America Student credit card (www.collegeparents.org). CPA is national association with 200,000 household members that helps parents prepare to put their children through college. The credit card (a partner of MBNA) allows the parent to set the maximum line of credit for the student's card.

The card arrives directly at the home of the parent, unlike most college credit cards, which arrive directly at children's dorms and are often marketed with T-shirts, calling cards, free compact discs and credit limits upwards of $5,000.

Like the Visa Buxx card, parents can monitor their children's expenditures via the Internet or a toll-free number.

The CPA provides educational resources to its members via its Web site, which also assists parents in the explanation of credit, responsibility, and budgeting.

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