If you have to travel by air, then you need a credit card to book tickets and rental cars. Even if a student has their own car, there is gas and repairs. What parent wants to think of their child driving hundreds of miles without a credit card in case of emergencies? Long gone are the days of an extra twenty dollars stuffed in the back of your wallet "just in case."
The fact is credit card companies love to sign up college students. Normal criteria for getting approved for a credit card is good credit history and proof of employment as a means of being able to pay your bill. Yet, as a rule, college students have no credit history, no employment (or very little), and no track record of financial stability. Basically that means they are more likely to spend out of control and rack up huge credit debt. Yet, credit card companies still woo college students. The reasoning is two fold.
First, they know that once you sign up an individual that person will likely remain a loyal customer for years to come. When the student graduates and becomes gainfully employed, they will likely stay with the credit card already in their wallet.
Second, credit card companies are in business to make money and when students run up large amounts of debt and don't meet the payments on time or in full they run up large finance charges and that means profit for the credit card company. Also, many student credit card offers come with large annual fees, enrollment fees, and other charges buried in the small print of the contract. They bank on students being so excited at the idea of having credit that they don't take the time to read the fine print.
Being at college is the first time that a young person operates as an adult—no rules, no curfew, no limits. And, part of being an adult is having a plastic card with your own name imprinted on it. But, before a student is given the reward and responsibility of a credit card, they should weigh the decision with some maturity. Taking a class or doing a bit of independent study in finance would give you a working knowledge of credit and how it affects your life.
Once a student has decided that they need a credit card, they need to consider how they are going to use it. Traveling, supplies related to college classes, living expenses are all legitimate charges on a student credit card. Using a credit card for shopping sprees, eating out, and other nonessential activities can lead to trouble down the road. While whipping out the plastic feels so adult at the time, just remember that, as an adult, you will be responsible when the bill comes. And, the bill will come.
Also, running your credit card up to its limit and only paying the monthly minimum will mean you won't have credit available when you need it for a necessary expense. Also, keeping your credit card close to its limit can damage your credit score. Students should also beware of applying for and receiving multiple credit cards. Having more than one card in your wallet is a temptation to use credit when you really can't afford it. One of the main reasons that students drop out of college is because they can't afford it. If you rack up huge debt in college, that debt and its consequences are going to follow you for years to come.
Now, having a credit card as a college student is not all bleak. A student who uses their credit card prudently has a safety net for emergencies and that can alleviate stress in an already stressful time. Also, using a credit card wisely can help a student establish a good credit score, positive credit history, and good spending habits. This can help a person entering obtain other credit, such as auto loans and mortgages, as they move out into life beyond the college campus.
