Should College Students Have Credit Cards?
College is full of lessons to be learned and one important lesson you should learn but most likely won't in the classroom is how to manage your money wisely. You will not receive a grade on how well you manage your first credit card. Unfortunately, many people learn credit card responsibility only after they have gotten themselves into a pile of debt.
Pros of Having Credit Cards
As with many things in life, there are positive and negative aspects to having credit cards. Being responsible with credit cards involves understanding both sides.
Credit cards are the best way to start establishing a credit history. To build your credit score, you need credit; therefore, getting a credit card while still in college is a simple way of doing this. The fact is that a major contributor to your FICO score is your credit history length. Obtaining a credit card while still in college helps you begin building your credit history so that when it comes time for you to require credit to obtain your first mortgage, you will not have a problem obtaining a loan.
Alternative to Carrying Cash
These days, not many people carry cash and college students, in particular, are not likely to deal with paper currency. If you do need cash, however, and don't have an ATM near you on campus, reaching for your credit card can help you if you are in a bind.
Avoids Identity Theft
Identity theft and fraud have increased dramatically with the rise in technology. You leave yourself more vulnerable to identity theft by making online purchases with a debit card instead of a credit card. If a thief does gain access to your debit card, it is too easy for them to drain your bank account. With a credit card, they are only racking up fraudulent charges that you can dispute and have removed.
Cons of Having Credit Cards
While there are many advantages to having one or more credit cards, you should also be aware of their significant drawbacks.
Forget to Track Spending
You can get yourself into serious financial trouble if you fail to track your credit card purchases. Typically, this results in a huge bill at the end of the month that you are unable to pay in full within your billing cycle. If you continue this pattern, it can lead to a hefty debt that you will have a hard time paying off.
Forget the Bill
No doubt you are very busy in college going to class, juggling homework, and keeping a part-time job. With so much going on, it does not take much to forget little details like paying your credit card bill. However, when you fail to pay your bill on time, it can damage your credit score tremendously. That might not hurt you too much while you are still a student, but it can put you in a negative position as you begin your new post-graduation adult life. This will make it more difficult to get a car or home loan and to get a great rate on that loan.
Open Too Many Cards
Too often, college students sign up for every credit card offer that falls in their lap. When you have too many cards, it can make it overwhelming to track your spending, pay your bills on time and stay out of debt.
Using Credit Cards Wisely
To keep yourself out of credit card debt and keep your credit score in check, you need to stay on top of your bills and pay them in full and on time every month. You don't use a credit card any differently than you would your debit card, except for how you pay it at the end of each month. With a debit card, your money automatically gets pulled from your bank account at the time of your purchase, but with credit cards, it's up to you to pay the balance, which can add up quickly.
The bottom line is this. You can establish credit responsibility and you should. This will set you up with a strong credit history so you can continue down your path as an adult with sound financial habits.