Advice for College Students Seeking Credit Cards
As students arrive on college campuses, many will confront something for the first time: whether to get a credit card. Increasingly, college students are obtaining credit, with banks finding this a lucrative target market. Indeed, around a quarter of college students graduate with $5,000 in credit card debt.
Handling credit properly is a challenge for all adults, even those with many decades of access to credit. But how can college students make smart decisions when it comes to credit? Below, our Plantation bankruptcy attorneys share some of what they have learned by talking to their clients over the past 40 years.
Think Twice Before Getting a Credit Card
There are some sensible reasons for getting a credit card starting at age 18. For one, you can start building credit early. This means that by the time you graduate college, you will have 4 or 5 years of credit history, which is very good. Remember that many people get turned down for car and other loans because they have no credit history, so if you can get a card, then some experts recommend you should jump at it.
Nevertheless, there are sound reasons to wait. We recommend that college students consider whether they have the income to cover payments. If you don’t, then you could quickly end up in debt—and student loan debt is enough without adding credit card balances on top of it.
Instead of getting a credit card, consider opening a bank account and getting a debit card. Using a debit card gets you comfortable with making purchases using plastic and is generally just as convenient as a Visa or MasterCard.
Choose the Right Credit Card
If you want to bite the bullet and get a credit card, then find a card that works for you. CNBC had a nice article that recommends the following:
- Skip cards with annual fees. Any perk associated with these cards are usually negated by the amount of spending necessary to obtain them.
- Avoid cards that offer rewards. These can induce too much spending. Also, to get the full value of rewards, you need to pay your balance in full.
- Compare interest rates. High rates can add considerably to a monthly bill. Although you will ideally pay your balance off each month, there might be situations where you can’t, and you want a low rate.
Having a credit card is not a license to spend more than you can afford. College students typically have constrained income. Even if you have a paying-job, you should think twice before making most purchases. One general rule of thumb: if you don’t have cash to buy something, don’t buy it on credit.
So why do people use a credit card? There are some solid reasons:
- You can easily pay monthly bills with a credit card. Automate payments online to ensure you never miss one.
- You have more rights when challenging a purchase if you used a credit card. For example, something you buy could be defective, and your card issuer could go to bat for you on getting a refund or replacement.
- Credit cards can help in an emergency and are safer to carry than cash.
Pay Your Bill in Full
This is one reason to never buy anything unless you have the cash to pay for it. Failure to pay your bill in full each month can lead to interest accruing. Paying only the minimum often results in people paying two or three times what they owe.
Decades of Experience Helping Consumers
Despite their best intentions, many people end up in over their heads in debt. If this describes you, please call the Plantation bankruptcy attorneys at Nowack & Olson PLLC today at 888-813-4737. We can discuss whether bankruptcy is right for you in a free consultation.