Once they hit college, students face a lot of new adjustments from choosing a course of study that can very well define their career to preparing themselves for independent living. Along the way, they may also be looking to pick up money management skills and to start using a credit card, perhaps to begin establishing credit. We present several credit cards for college students that are suitable choices for those who wish to build their credit while earning rewards in the process. What's more, many of these cards aim to reward good credit card habits by offering more attractive perks when certain requirements are met.
Our first few credit cards taught us a few things -- that there are right and wrong ways to use them. Like anything else, there are pros and cons to using a student credit card. Let's review some of these points:
For students, one big benefit that credit cards provide is the convenience that they offer when there are emergencies. Who knows what emergencies a student will encounter, and it is comforting to know that your college student can be financially covered with a credit card in such cases. Typical scenarios might include vehicle breakdowns and attendant car repairs and towing expenses, motel bills, meals, doctor charges, or midnight apartment repairs, such as water leaks. But impromptu trips to the Bahamas certainly don't qualify as an emergency!
Having a student credit card will help your child learn how to be financially responsible and will also help them develop a credit history.
Here are some ways to start off on the right footing with your college student: Teach your kids to use a credit card only if they can pay off their balance in full each month. Point out that using a card for installment payments is a no-no. Other good habits to develop include keeping one's balance below the credit limit and always paying on time.
Finally, show your kids that by using a credit card in the "right" way, they can potentially receive rewards; and using cards irresponsibly can lead to financial problems later. Making these distinctions early should help your child develop a healthy outlook on debt, credit and money management.
One of the biggest arguments against credit cards for students is the potential for these cards to get an unsuspecting teen into financial trouble. There's the potential to develop bad money habits when you own a credit card: one month of not paying off your balance can easily snowball into something more problematic, and where can that lead you? When you accumulate debt early in your life, it's a problem that becomes much harder to surmount.
A student may end up with several credit cards, repeating the same mistakes with each one. It therefore goes without saying that credit cards should be used with caution especially when a student is first starting out as a card holder. If you're a parent, you must first determine if your child is ready to start using a card, and before you give them the green light for this, lay down your ground rules well in advance.
Thanks to the credit card legislation passed in 2009, student credit cards have become more of a challenge to get if you are under the age of 21. As a matter of fact, the Credit CARD Act even cracks down on the mere presence of credit card offers on college campuses nationwide. So, how do students gain access to credit cards and how can they learn how to use cards the smart way?
While many students look forward to the freedom that having a credit card affords them, there are some who may not realize the magnitude of irresponsible spending. For those students who are lucky enough to obtain a student credit card, prudent spending habits must be established early on in order to prevent credit problems in the future.