Some people say that credit cards are, “bad” and college administrators shouldn’t allow credit card companies to come on campus. Credit card companies are predatory and college students aren’t capable of making financially sound decisions at such a young age. After all, many college students are just 18-years-old, should they really be given access to such a, “dangerous” tool?
YES!
Personally, I think all of that anti-credit card propaganda is bologna. If you’re a legal adult at age 18, and are able to vote, go to war, smoke, buy porn and borrow tens of thousands of dollars in student loans, then why shouldn’t you be able to make equally bad decisions with other forms of credit?
Ok, I’m kidding. Sort of. But, in all seriousness giving a college kid a credit card doesn’t mean he’ll abuse it. Sure there’s a college student somewhere who maxed out her credit card and woke up hungover in a hotel in Vegas with a new husband and a new tattoo. But I suspect a student like “that” would get herself in trouble whether she had a credit card or not. Just saying…there are plenty of college students who have successfully used credit cards to build their credit history, improve their credit score and responsibly borrow and pay back money (in full each month).
The good.
I’m all about responsible credit card usage, so for me, the “good” in credit cards is twofold for college kids and the general population.
1-Full payments that are made on time are a great way to build your credit score. Your credit score is what lenders use to determine if you are trustworthy enough to lend money to. When you finish college you may want to buy a house or a car. If you do, you’ll want a good credit score so you’re given a loan with a low interest rate. You also may need a good credit score if you’re applying for certain types of jobs (finance industry etc.).
2-Rewards! If you have a points or rewards card (if you have a credit card you’d be foolish not to!) you can cash in those points for gift cards, travel, trips and electronics. If you’re not interested in a rewards card, a cashback card is a nice way to earn a little bonus off the money you’d have to spend on everyday essentials anyway.
3-Practice makes perfect. As much as I advocate avoiding student loans, student loans have become a “necessary evil” for many students. I hope you never have to take out student loans, but if you do, paying off your credit card bill in full, and on-time, each month has given you plenty of practice towards those good repayment habits.
The bad.
If you’re not responsible with your credit card use, you can get yourself into a lot of trouble. A few swipes here a few swipes there and you’ve totally busted your monthly budget. Seriously, If you don’t understand how credit cards work, you can get yourself in over your head. Not to mention if you fail to pay your credit card bills on time you’ll hurt your credit and may not qualify for certain contracts or loans (cell phone contracts come to mind).
The ugly.
Several of my friends signed up for credit cards when we were freshman. By the time they finished school they were thousands of dollars in debt. A good friend of mine (who shall remain nameless) signed up for a Red Sox MasterCard to get a free tee-shirt. He now jokes that that tee-shirt was, “the most expensive item of clothing I’ve ever owned.” Long story, short: If you can’t control your spending and have a propensity for buying stuff you can’t afford, avoid credit cards like the plague!
So what do you think? Credit cards for students are a good idea or a tragedy waiting to happen?
**I’m on vacation this week with my grandparents (yay!). I appreciate each and every one your comments and will respond to all of them as soon as I return! Have a wonderful week!**