Should University/College Students Get A Credit Card?

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Mixing spending and credit cards with young people may seem like a bad idea these days, especially when it comes to high-interest cards and the fact that some students may not have the in-coming earnings for payments. Still, whether a student is living on campus or at home, if used responsibly, a credit card could prove beneficial for them in the long run. Here’s why:

Access To Funds:

Cash flow can be tight for students, whether they have a part-time job or not. A credit card allows access to funds that can help with their tuition fees, food, rent, textbooks, and other school supplies. As with anyone who has a credit card, young or old, it’s important to stress to your child to watch their balance diligently. In this day and age where technology is literally at their fingertips, parents can help children manage their student credit card debt by showing them the tools to view their balances, and stay abreast of their spending. Payments can also be made via the web or banking apps on their smartphone devices.

Credit Score:

Having a credit card can help students build a good credit history, which is vital when it comes to their financial future if they want a car or house someday. A student credit card will help to create a solid credit score foundation to assist them in qualifying for a loan or mortgage once they graduate. That is, if they use their credit cards responsibly by not going over their limit, and paying their minimum balance (if not more) each month and on time. 

Rewards:

Nowadays, reward credit cards are all the rage, and student credit cards also offer programs where points, cash back, or gift cards can be earned and collected when making credit card purchases.

Protection:

Much like regular credit cards, ones that are geared to students also offer consumer protection against big-ticket purchases. As well, they provide insurance on rental cars, and travel insurance for those spring break trips or visits home. Lastly, credit cards help to create a “paper trail” of sorts, and are a great way to offer “proof of purchase” should your student buy something, and then lose the receipt if they want to return said item.

As long as your daughter or son uses their credit card in a responsible manner, this financial tool can be a solid way for them to build credit, and learn to manage debt. You will want to sit down with your child and discuss the dangers in maxing out their credit card, or missing payments, and how this could affect their credit history in the future. A low credit limit for them to start off with on their first credit card is highly recommended. You may also need to cosign on the credit card application for them to gain approval. 

Another route with a far more “hands on” approach is adding your child to your own credit card as a separate user. This way, you can effectively monitor their spending habits and repayment abilities before they branch out with a credit card of their own.

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