As the name suggests, a students’ credit card is a credit card for college students. It helps the student learn financial concepts and become more responsible. It also helps parents control their children’s spending. Here are the pros and cons of credit cards for college students:
Advantages
1. Students learn financial responsibility. All they have to survive in the world is a credit card, and so, they realize that they must use it judiciously and always keep it active by making payments on time. If they don’t, they will not be able to spend until the outstanding is paid, or, unless their parents are ready to bail them out. College students realise the importance of paying on time and maintaining good credit and understand what it’s like to be without money. They get introduced to how it’s like in the real world, and such financial training makes them tougher and ready to face financial challenges in the real world.
2. A students’ credit card helps college students build up a credit history. Students get a head start on building credit scores because they start building from a relatively young age. Every time they swipe their card and build a small balance, it goes into their credit history. Year after year, the credit history accumulates and by the time they are out of the college and into a job, they can easily get loans to rent out an apartment, buy a car, avail loans, and do much more. They become financially independent as soon as they graduate.
3. A credit card helps students become financially independent. By the time they become adults, they are already hardened veterans who have spent a lot of time deep in the trenches. A credit card makes matured adults out of students. It’s a whole game changer!
4. A card can help students in times of need. Let’s face it – all students are short of cash most of the time. If an emergency occurs, they may not have enough cash for help. But a credit card will help them get out of a car accident or buy expensive reference books, and more.
Disadvantages
1. As parents support the children’s spending by paying their card dues, the child does not actually learn fiscal responsibility.
2. If the college student misuses the credit card, then there can be hell to pay. This is because his credit history starts getting scarred from a young age and at a later stage, while reviewing his credit report, lenders may get the impression that the borrower is a financially reckless person.
3. Instead of using his credit card on necessities, a student may spend it on unwanted luxuries like partying with friends, holidaying, etc. His parents will end up paying the credit card debt, but the student will learn nothing and instead become a spend thrift.
So there are two sides to a credit card for college student – good and bad. That said, the advantages of a student owning a credit card are far greater than not owning one. Even if the student slips up, he gets to learn the second time, and it’s easy to get up and pick up the pieces when you’re young. So, the argument closes in favor of college students owning a credit card.