Nowadays it has become quite easy for college going and even high school students to get credit cards. But the question remains that whether you should allow your teenager to get a credit card while he’s still quite young and thus irresponsible. Many college students are already accumulating debt through student loans. Moreover, there are some sleazy marketing arrangements between banks and college campuses to corner students to get credit cards.
But should you really panic when your child brings home their first credit card? Here are a few reasons to explain that credit cards for college kids might not be such a bad thing after all. In fact, you may want to encourage your child to get one while they still can.
Advantages of Student Credit Cards
The cards are easy to get.
It is a fact that credit cards are most easily obtainable during the college years. Students are seen as loyal and trustworthy customers and thus banks offer credit cards to students hoping that these young people will become high-earning professionals who don’t pose much of a credit risk.
The limits are low.
Student credit cards offer low limits mostly ranging from $500 to $1000. No bank will offer college student many thousands of dollars in credit, especially if they don’t have a steady source of income. Thus such a small amount is not sufficient enough to do any harm to the kid.
It’s never too early to start building a credit history.
College years may be the best time to build some credit score for the future. The length of credit history is an important part of the credit score. If your child gets a credit card in college, they’ll already have an established history by the time they graduate and this will benefit him when he starts to look into purchasing a car or home.
Help is available.
Many campuses have started financial management courses for college students. This is long overdue, and there are high hopes that such classes will enable the students to use their credit cards responsibly. Parents can also play a vital role to help their kids understand that a bad credit can affect their whole future.
It is better to have a frank discussion with your college going child and tell them about debt. Try to explain the difference between good debt i.e. debt that brings a return on investment, and bad debt i.e. going into debt that you can’t pay for. Above all, you should teach them the importance of living within their means and not viewing credit cards as ‘free money’.
