With credit cards that feature category bonuses for spending on gas, groceries, and travel, college students are uniquely positioned to earn cash back and rewards points. From the ballooning costs of text books to class enrichment event fees, having a card can make an expense a minor consideration in making a studious decision. Whether for college students or retirees, credit cards are almost synonymous with convenience. Of course, while a parent's idea of an emergency is a flat tire or a minor ER visit, a student's emergency might be a frightening lack of instant noodles: so be certain that these expectations are aligned before any spending takes place. Security for emergenciesīeyond some protections that credit cards can offer, such as damaged or lost purchases, credit cards are often considered insurance for emergencies when the student is far from home. Understanding how APR works when you're carrying a credit card balance, how to budget to meet monthly payment obligations, and building a strategy to make your credit use work for you through rewards and cash back programs are all ways that having a credit card can build a foundation for financial success. Of course, this goes both ways: if the cardholder misses payments or is late on payments, aside from fees, the cardholder's credit report will include these negative reports, which will lower the cardholder's credit score. With every month of positive on-time payments, the cardholder will see that payment land on her/his credit report, which will help to build a credit score. Here's how a college student can benefit from enrolling in a credit card account. Pros: Why you should get a credit card in college The main benefit of this type of credit card is that each payment helps to build up the cardholder's credit history. In this sense, the card issuer doesn't take on any risk: even if the cardholder hits their limit or does not make payments on the card, the debt can be repaid through the deposit. Once the deposit is made, the credit card's limit will equal the amount of the deposit. Secured credit cards require the cardholder to place a deposit down for approval. However, if the student fails to make payments on the card, the co-signer becomes fully liable to repay the debt in full. Some credit cards will allow parents to act as co-signers for the card, which uses the parents' credit history for approval, but pushes the responsibility of repayment directly on the student. Become an authorized userĪdding a college student to an existing credit account as an authorized user can help build the student's credit history, but care should be taken to understand how the student can use the card and who is responsible for any of his/her expenses on the card. However, the student can apply on his or her own and, with proof of college enrollment and some income, they can typically earn approval. Student credit cardsĬredit cards branded as student credit cards may sometimes have flexible credit requirements for approval, but usually feature lower credit limits and can have average to high APRs. Given that most college students will have no or very limited credit history, there are a few different types of credit cards to consider. Types of credit card accounts for college students Weighing the benefits and drawbacks of opening up a student credit account should help your college student embark on a secure student credit journey. But if you can't support regular on-time credit card payments, opening up a credit card for a college student may hamper their ability to get everything from apartment rentals to a car loan. Establishing a strong credit foundation can set a young cardholder up for a lifetime of credit perks.
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