A Tax Fact from The Tax Institute at H&R Block

College is an exciting time. New friends, information and experiences are waiting. So are long nights, study sessions, cheap pizza and unfortunately for many, credit-card debt.

According to a study by Nellie Mae, a student loan institution, 83 percent of undergraduate students attending four-year institutions graduate  with at least one credit card — 47 percent have four or more cards, and these graduating seniors carrying, on average, $2,864 in credit-card debt. Ouch.

This presents a dilemma for many parents: How do you help keep your student out of debt, but still able to purchase those needed items when away from home?

There are a few things parents can do to keep young adults on a fiscally responsible track. For example, consider setting them up with a debit card, like the H&R Block Emerald Prepaid MasterCard™.

A strong credit history is too important to leave to chance. With a low risk option, such as the Emerald Card, students can enjoy the freedom of a credit card, but without the risk of over extending, late fees and other penalties incurred with credit cards. They also learn first hand how to manage their money and take that next critical step toward financial responsibility. Some advantages of a debit card include:

• Like a traditional credit card, branded prepaid debit cards are accepted at most mainstream establishments, including stores, gas stations, restaurants and online merchants.
• Purchase amounts are deducted directly from the account balance. Be sure to get a card backed by FDIC insurance.
• Unlike a traditional credit card that offers a maximum allowance, a prepaid card is reloadable. This allows parents some involvement in their child’s financial success.
• Load the card weekly or monthly. The student can also load the card with funds earned from part-time jobs. Unlike a traditional credit card, once the money is gone, the student cannot keep spending.
• Participants can easily reload a card at participating reload networks such as MoneyGram®, Green Dot®, and Western Union®.

This Tax Fact is brought to you by The Tax Institute at H&R Block.

To view other helpful tax information or listen to our Tax Fact podcasts, visit www.digits.hrblock.com

As always . . . everyone’s tax situation is different, so be sure to consult a tax professional or financial advisor before making important financial decisions.

This Tax Fact is for educational purposes only and is not intended to be a substitute for seeking personalized, professional advice, nor is it intended to be used to avoid IRS penalties.