(MONEY Magazine) – As if sex and drugs weren't enough, nowadays parents have to warn their college-age kids about another danger: credit-card debt. This fall, Citibank, American Express, Discover and other credit-card issuers will flood college campuses with applications for pre-approved plastic, some of which carry interest rates of 20% or more. To get a card with a credit line of $1,000, college students age 18 or older need little more than a student ID. Who pays the bills when the kids default? Usually parents: Though they do not legally have to pay unless they co-sign the application, most feel morally obligated to do so. But by then their kids have already hurt their nascent credit reports. In testimony before a House consumer credit subcommittee in March, Michele Bedell of Springfield, Va. told of receiving Discover and Visa credit cards in the fall of 1990, during her sophomore year at Virginia's Radford University. At the time, she was 19 years old. By the end of 1992, when she stopped using her cards, she had racked up nearly $3,700 in debt. Since then Michele, who graduated last spring, has settled with Discover, paying $600, half of her balance; Signet Bank is suing to recover the $1,500 she still owes on her Visa card. Connie, Michele's mom, says she can't afford to pay her daughter's bills. Meanwhile, Michele's credit rating is now badly damaged. Do experiences like the Bedells' mean you should tell your child to shun plastic? Probably not, says Gerri Detweiler, author of the audiocassette Smart Credit Strategies for College Students ($15.95; Good Advice Press; 800-255-0899). Used judiciously, credit cards can help college students build | a good credit history, which will make it easier for them to get a job, rent an apartment, take out a car loan, and get other credit cards when they graduate. Here's how to make sure they use the card on your terms: -- Read a credit-card statement or a cardholder's agreement together. Explain how finance charges, grace periods, minimum payments and late fees work. Point out that once you begin carrying a balance on your card, you will normally be charged interest on your purchases beginning on the date that you bought them -- not on the date the minimum balance is due. -- Explain the danger of a bad credit rating. As soon as your child gets a credit card, credit bureaus begin keeping tabs on his or her balance and payments. Any late payments can remain in their record for as long as seven years, hurting their chances of getting a job, a car loan and sometimes even utility service. -- Discuss what types of credit-card purchases you will and won't pay for. It's best to confine credit-card use to emergencies only. If your child plans to charge everyday items, such as gas, food and Pearl Jam CDs, make a list of the types of expenses you will and won't be willing to cover, and set monthly spending limits for each category. Make it clear that you will not pay for big-ticket items, such as stereos and computers, without first approving their purchase. -- Do not co-sign your child's accounts. If your child is over age 18 and a full-time student, he should have no problems getting a card of his own. Despite the dangers of setting your kid loose with a line of credit, that's a smarter move than using your record to help him get a card. Why? If you act as a co-signer or give him a card from your own account, his late payments will damage your credit report.