Credit Cards For College Students

Making credit cards for college students available is a decision which can have long-lasting consequences. College campuses routinely have tables set up in student centers or at various activities where the invitation is given for the student to become a cardholder. Appealing gifts accompany the invitation, making this a tempting offer which is difficult to refuse. Consider for a moment the pros and cons of this decision. On the one hand, credit cards for college students may seem like a good idea. This provides the opportunity to establish a credit history, which may be useful later when a person applies for a mortgage or other types of loans. Establishing a history by paying off purchases on time is a great way to build up an excellent score. However, if the student is not familiar with how credit works, having a card can provide for another type of opportunity altogether -- that of learning how to dig one's way out of debt! A person may have to learn first-hand that this is a slow and painful process. Unfortunately, decisions made during this period of life may also have repercussions for years to come.

Background checks are routinely done by prospective employers, especially in jobs where there may be a temptation to handle other's funds improperly. Employers may consider an employee with significant debt a bad risk for such positions. These days, even employers in jobs where money is not an issue often require background checks. They may consider debt an indication of character. A debtor could be viewed as impulsive, immature or irresponsible. Although this may be an incorrect or unfair assumption, such conclusions could lead a prospective employer to discard a job application in favor of another individual. Debt could even have an impact upon a person's choice of mate. Some might be understandably hesitant to align themselves with a person who is deeply in debt. Of course, money should not be the basis of any marriage, but finances are frequently an issue in many marital difficulties. Debt resulting from credit cards for college students can cause additional stress to a young couple already struggling to repay school loans and obtain a home. Unforeseen medical issues or unexpected expenses can send a tightly stretched budget over the edge.

Ideally, parents should prepare children from a young age for handling finances correctly. A small allowance could be given, which will allow him or her to experience first-hand the challenge of delayed gratification and the joy of accomplishing small savings goals. Important lessons can be learned about handling personal finances long before considering credit cards for college students. If a college student is not yet an adult, and the prospect of a card seems attractive, take the time to research the subject. Internet searches can turn up sites which explain the proper use of finances, or which rate credit cards for college students according to certain criteria.

Examining sites about credit cards for college students raises issues which the student may not have considered. For example, does the card have a yearly fee? Seek out one which doesn't begin with the cardholder already losing the credit game. Are cardholders liable for fraudulent charges? Find out such information before identity theft becomes a problem. Check out the interest rate, not only for the first three months, but for normal use. That fantastic APR can turn into a nightmare later. Teach students to read the fine print carefully before signing any agreement. Note the charges for late fees or balance transfers, or any further late payment penalties. Some companies practice 'universal default', which allows the card issuer to increase rates simply if a person fails to make a payment on time to another lender.

Some 'student' credit cards for college students have higher interest rates than a normal credit card. These specially designed credit cards are also likely to have an irresistible teaser rate for about three months (which goes by in a flash) followed by a significantly higher interest rate for the rest of the time the card is used. Students who are new to the use of credit can develop habits and tastes far beyond what they can realistically afford. Most cards require only about a 2% minimum payment for items charged. Students may believe that if they pay this minimum amount each month they are being responsible borrowers. They may fail to realize that the total of their debt begins to increase exponentially due to interest charges on an ever-growing balance. Many student cards have a variable rate, which only compounds the problem.

If students are away at school, parents may be reluctant to leave them without an 'emergency' credit card. Many of the problems parents worry about will never (thankfully) materialize, yet no parent wants to visualize his or her son or daughter stranded by the side of the road due to car trouble in some far away state. A compromise may be preloaded credit cards for college students which can only be used up to the stated amount. This is a great way to deal with emergencies or to practice dealing with managing a budget. If parents are providing a monthly stipend for food or other expenses, be sure to be clear about the fact that the student is not to expect a bail-out if he or she blows through the entire amount in a week or two. This is not being cruel -- it is done so that the student becomes a responsible adult instead of depending upon others to rescue him or her from a careless lifestyle. As Proverbs 19:18-19 says, "Chasten thy son while there is hope, and let not thy soul spare for his crying. A man of great wrath shall suffer punishment: for if thou deliver him, yet thou must do it again." This is sometimes harder on the parent than on the young adult!