College Aged Child Overspends

[Anonymous]

I have a child in college who we cover all expenses for: tuition, room and board, food, clothing. The only thing we want them to pay for is their entertainment. This summer said child was supposed to save most of their earnings for spending money in school, but they have already spent about 1/2 on frivolous things. Last year I paid off their credit card when they ran out of money so they wouldn’t get hit with late fees. Their credit card is a separate card but it’s connected to our bank account so I can pay it and see the charges.

I want to take a harder line this year and not bail them out when they run out of money. What’s the best way to let this happen? Let them incur late fees? Take a hit to their credit score? I really don’t want that to happen but I also need them to learn to budget. Will their lateness on paying off their card hurt our credit score?

Suggestions, please.

[Anonymous]

Cut off the credit card.

[Anonymous]

Not sure about whether their credit card late fees would affect your score, but there's probably some way to disconnect the card from your account if it does.

Anyways if you don't want your kid to run to you for money, then you should say no to those requests.

[Anonymous]

Well, no credit card for them. A checking account where they put $ from the summer/campus job. If they run out, then no going to the movies or whatever.

[Anonymous]

My daughter only has a debit card. She has my credit card as a back up for emergencies however she knows that if she ever uses it without my authorization, she will be in big trouble.

[Anonymous]

Your kid isn't ready for a credit card, then.

[Anonymous]

Yep. Debit card. And emergency CC. Tell them that since they were irresponsible last year, no CC this year. If they charge on your card without getting permission, then you will take that away too.

I would not have a child like this attached to your own credit.

[Anonymous]

Your kid can't handle credit. Lots of college-aged folks can't.

[Anonymous]

With my credit card app I can turn the kids credit cards that are tied to our accounts off and on. I moved to blocking the card most of the time.

[Anonymous]

Anonymous wrote:I have a child in college who we cover all expenses for: tuition, room and board, food, clothing. The only thing we want them to pay for is their entertainment. This summer said child was supposed to save most of their earnings for spending money in school, but they have already spent about 1/2 on frivolous things. Last year I paid off their credit card when they ran out of money so they wouldn’t get hit with late fees. Their credit card is a separate card but it’s connected to our bank account so I can pay it and see the charges.

I want to take a harder line this year and not bail them out when they run out of money. What’s the best way to let this happen? Let them incur late fees? Take a hit to their credit score? I really don’t want that to happen but I also need them to learn to budget. Will their lateness on paying off their card hurt our credit score?

Suggestions, please.

Sit down with your child to create a budget. Set an amount that they can spend per week on extras. I wouldn't allow my child to ruin their own credit score, but this kind of behavior makes it really clear that they are not using any critical thinking and/or think that the money is unlimited. It sounds like they need more regular supervision, including checking to make sure they are staying within their budget. Since you can see all the transactions, that should be fairly easy to police. You shouldn't have to do it, but they clearly need supervision given that they have blown their budget twice in the last year (once when you had to pay the bill and now having spent half their summer earnings).

[Anonymous]

Why is the credit card linked to your account and you can see the purchases? Is it your card with her as an authorized user?

I’d disconnect myself and I’d learn to say no. You’re right that it’s really important for her to learn the skill and self control to stick to a budget. It took my oldest to age 25 before he was ready for a credit card.

[Anonymous]

I mean. I don’t know why the posters are saying the child “can’t handle credit.” They DID handle credit. They made a bet that the parents would come through, and it worked out with no apparent consequences.

Whatever you do OP, give this child real parameters that you will stick to and real consequences. I think extending them credit that you have bailed out in the past would be unkind, frankly, even if you’ve warned them.

Chances are good your kid will open their own credit card and run into problems. If you’ve said you won’t help them, don’t help them. There are worse problems than a low credit score.

I would argue for giving them a semester lump sum for food and such and letting them manage it, but ymmv.

[Anonymous]

Separate your finances- take their credit card, give them nothing beyond whatever set amount you have. They can get another one very easily.

[Anonymous]

Anonymous wrote:My daughter only has a debit card. She has my credit card as a back up for emergencies however she knows that if she ever uses it without my authorization, she will be in big trouble.

This. Teach him how to budget. $x a month, maybe even just have him put $x a month into a checking account and only use that.

[Anonymous]

This is a very important skill. I would cut the credit card up and have a debit card instead. Turn off overdraft too.