The easy credit that high school seniors and college students enjoy can be perilous - to both students and parents.
Students can often qualify on their own for cards with credit lines of $500 to $1,000, without any employment, income or credit history.Underwriting is lenient mainly because college students tend to be loyal customers - three in four keep their first credit card for 15 years.
There's so much competition to be the first card in a young adult's wallet that it's not unusual for students to get four or five cards.
And that's where the big trouble lurks.
When the payments on these high-interest-rate cards become too much to handle, parents can end up bailing out their kids.
If they don't, graduates may start out with excessive debt and a blemished credit history.
In cases where credit isn't offered quite so readily, parents may be asked to co-sign a credit-card application.
But creditors have no obligation to notify co-signers when the primary borrower isn't making payments.
In addition, your credit history could be tarnished if your child doesn't pay on time.
You might as well be the primary borrower and let the child be the co-signer or co-borrower, advises Gerri Detweiler, a consumer advocate and former director of Bankcard Holders of America.
That arrangement differs from simply giving your child a card on your account, which doesn't help him or her build a credit history.
The best way to avoid trouble is to send your student to school with some counsel on credit in particular, the minimum-payment trap: If you pay just the minimum, it will take seven years and cost $365 in interest to pay off a $500 balance on a card charging 18 percent interest and requiring monthly payments of just $10 or 2.5 percent of the outstanding balance.
Want someone else to deliver this lecture?
"Smart Credit Strategies for College Students," an audiotape recorded by Detweiler and aimed at teens, teaches all the essentials (Good Advice Press, $15.95; 800-255-0899).