College students are often too inexperienced in finances to deal with credit cards in a wise and responsible manner. If credit cards are viewed as a necessity to cope with everyday living expenses then they should be avoided at all costs, as they simply represent an invitation to live beyond ones means. It is far better to seek out other methods to provide a gap in funding than succumb to inevitable credit card debt.
Any student considering signing up for a credit card should take the time to read and understand the small print and not be influenced by the headline advertisements. The rash of easy credit is no longer available and students are now required to produce either a responsible co-signer or proof of income. Those are able to persuade a co-signer to stand as guarantor should understand that irresponsible use of the card will impact the credit rating of the co-signer, who is equally liable for any accrued debt.
Credit cards can be used astutely by college students to establish a good credit rating which will benefit them upon graduation. However it is a fine line between managing a card well and succumbing to the ease of its temptations. Students who expressly opt for credit in order to establish a credit history should always ensure that the monthly balance is paid in full in a timely fashion, as this helps to establish credit.
As students often have busy study and work schedules it is advisable to establish automated payments to ensure the credit card bill is paid on time, and thus avoid late payment fees and penalty interest rates. At the same time it is important to use less than 30% of available credit to show responsible usage will again aid in credit building.
There are credit card myths which some students have fallen prey to unnecessarily. It is a common error to believe that one must carry a balance to establish credit. Those who do so pay unnecessary interest, and whilst carrying a low balance is not in fact detrimental, it simply wastes money through interest payments.
Providing the student is disciplined enough to clear the balance in full on a monthly basis then the interest rate on the card is immaterial. In such instances credit cards should be chosen on the basis of the rewards they offer, whether cash backs or redeemable points. Some student credit cards reward those who make payments on time.
It may be tempting to sign up for a credit card but the majority of students have encountered problems through using them irresponsibly. Used irresponsibly credit cards can cause long term damage to ones credit reputation and result in debt which may prove difficult to extricate oneself from.
Unless they are taken as a tool to establish credit and benefit from rewards without ever paying interest, student credit cards are best avoided until the student has a solid grasp of finances.