Back-to-School Money Tips for Teens From Mellody Hobson

Teens need to think more than ever about money this year as they head back to school. How can they manage their money the right way at college? How can they learn to spend wisely while still in high school? "Good Morning America" financial contributor Mellody Hobson has a money boot camp for you and your kids.

Should College Kids Have Credit Cards?

In the past, Hobson says, she has been reluctant to advise parents to get their kids a credit card, because they can be quite dangerous in the hands of young adults. A recent study by Sallie Mae, the college student loan company, shows that 84 percent of undergraduates have credit cards and that, by graduation, seniors in the study averaged more than $4,000 in credit card debt.

VIDEO: Mellody Hobson shows college-bound kids the best way to manage their money.Play

Hobson used to recommend debit cards instead, because you can't spend more than is in your bank account. But now, because there's a new law going into effect that will require parents to co-sign for children under 21, she has had a change of heart. A credit card will help your children learn how to spend responsibly, she believes, and help them build their own good credit history.

There are hundreds of cards out there, Hobson says, so check out Web sites like or, and find a credit card that has a low limit, a low interest rate and no annual fee. One card she likes is the Chase Freedom MasterCard. It has no annual fee, and you can set a limit of a few hundred dollars, so your child can't get into trouble.

What Should College Kids Look for in a Bank Account?

Hobson says it's important to know what to look for when you pick an account. According to the American Bankers Association, more than half of the large banks have bank accounts for students that are free or discounted. Try to pick a bank for your college student that has a low minimum balance, no fees, online banking and an excellent interest rate. If you can, make sure the bank is located on campus, if your children are heading off to college. This will ensure that your kids do not pay excessive ATM fees and that they have easy access to their money at any time.

Mellody Hobson's Money Tips for College Kids

Hobson recommends these accounts:

Schwab High Yield Investor Checking This is a completely online account, so there are no branch locations. Kiplinger's Personal Finance rated it the best checking account out there. The account has no minimum balance, no ATM fees or any other fees. If you use another bank's ATM's, Schwab Bank will fully reimburse you for any fees that you may be charged. You get a debit card, checks and online bill pay. The interest rate on the checking account is also good, at 0.75 percent.

Bank of America Campus Edge Checking This account has no fees or minimum balance, and it only takes $25 to open an account. You also get one free pass on your first overdraft, and you have access to 18,000 ATM's.

PayPal Debit Card Account PayPal also has a cool new account geared for teens and young adults. Parents put money into a PayPal account that a teen can access online or through a debit card. If your teen tries to charge more than the amount in his or her account, the charge will be declined, and there are no overdraft fees. If you need to add more money, parents can simply send a text to PayPal authorizing an increase, or they can do it online.

Do Teens Need to Balance Checkbooks?

Hobson says it's important for teens to learn that you need to track your expenses, and one of the best ways to do that is by balancing your checkbook. When you pay attention to how you're spending money on all those little items, you realize how everything adds up and you can budget wisely. You also need to make sure the bank is getting things right, or that you don't have a big check waiting to clear and you might end up overdrawing on your account.

How to Trim Textbook Expenses

The most recent government statistics show that the average student spends $900 a semester on textbooks. Hobson says this is outrageous, considering that you use the books for one semester and then never look at them again. This high price is mostly attributed to students' buying their textbooks from the university bookstore, but there are some real money-saving alternatives that could lead to big savings.

One of the best ways to find cheaper books is to buy your books from or On Amazon, you can save up to 90 percent on used books and 40 percent on new books. Similar savings can be found on

Another great option, Hobson says, is electronic textbooks. The largest textbook companies got together and created Through this site, you can buy digital subscriptions for your textbooks for a certain period of time. The site has more than 7,000 titles, and the savings could be close to 50 percent. Individual publishers and campus bookstores may have their own subscription services, so check with them too.

ABC News' Katie Escherich contributed to this report.