The Case for College Credit Cards |
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by: Janna Weiss
There's been a lot of scrutiny and criticism aimed at college-aged kids and credit card offers. Many college students are already accumulating debt through student loans, and some of the marketing arrangements between banks and college campuses feel downright slimy. But should you panic when your child brings home their first credit card? Here are a few reasons why college kids with credit cards might not be such a bad thing after all. In fact, you might want to encourage your child to get a couple of credit cards while they still can.
The cards are easy to get. In fact, experts agree that the college years are the time when credit is most easily available. Banks offer credit to students with the hope that these young people will become high-earning professionals who don't pose much of a credit risk. Extending a line of credit to young adults with bright futures is practically money in the bank.
The limits are low. No college student will be offered many thousands of dollars in credit, especially if they don't have a steady source of income. Many student credit card limits are $500 - $1,000. While that's nothing to sneeze at, it's unlikely that such an amount will cause financial ruin for the student.
It's never too early to start building a credit history. The length of one's credit history is an important part of their credit score. The longer an account has existed, the better. If your child gets a credit card in college, they'll already have an established history by the time they graduate and look into purchasing a car or home.
Help is available. Have you talked to your kids about debt? Maybe you've tried to be a good role-model; or, perhaps you're an example of what not to do with credit cards. Either way, your kids have been paying attention. Plus, many campuses are now offering - or requiring - financial management courses for college students. This is long overdue, and there are high hopes that such classes will lessen the temptation to abuse the plastic.
If your child is nearing college age, have a frank discussion with them about debt. Explain the difference between good debt (debt that brings a return on investment) and bad debt (going into debt for consumables or rapidly-depreciating items). Most of all, teach them the importance of living within their means and not viewing credit cards as ‘free money’.
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