When it comes to building credit, it’s hard to beat the convenience and utility of credit cards. This is especially true for young people who are just starting to learn the ropes when it comes to finances, and for those who want to build credit without having to finance a large purchase.
Building credit during college also comes with some immense benefits, whereas not building credit may hold people back. If you’re curious why you should and shouldn’t get a credit card in college, here are six reasons to consider it and three reasons to avoid credit for now.
6 reasons college students should get a credit card
Credit cards for college students can be incredibly valuable in more ways than one. Here are six major advantages that come with having one and using it wisely.
Build credit for future goals
Credit cards help young people build credit each time they use their card for purchases and make an on-time payment. With this type of positive information on their credit reports, college students can prepare for future purchases like a new car or a home.
Credit cards are also relatively easy to get approved for — even for those with no credit history or poor credit. Not only are there secured credit cards for college students with limited or no credit, but there are credit cards for students with bad credit as well.
➤ SEE MORE:How to build credit as a college student
Charge every day college expenses
Credit cards let college students charge everyday purchases and pay one monthly bill, which is considerably more convenient than carrying cash around or tracking purchases with a debit card and a connected checking account.
Earn rewards
Good credit cards for students also offer rewards for spending, which can come in the form of “points” or cash back. These rewards can be used for simple redemptions like statement credits, gift cards or merchandise.
➤ SEE MORE:Best practices: Using credit cards for college expenses
Learn positive financial habits
One of the best credit card tips for students is this — charge only what you have the cash to pay for and pay your credit card in full and on time each month. Credit cards can help college students learn how to live within their means and keep up with bills over time.
Cover emergency expenses
A good credit card for college students can also serve as an emergency fund that is only used if required. If a student ends up with a flat tire or has a medical bill they need to pay right away, a credit card offers easy financing that can be paid back over time.
Benefit from consumer protections
Planning to buy a new laptop for school? Good credit cards for students often come with consumer protections like purchase protection against damage or theft and extended warranties.
➤ SEE MORE:7 credit card tips for college students
College students should skip credit cards if….
While the best credit card tips for college students can leave young people ahead, some consumers should skip credit altogether. Here are a few reasons to think twice about applying for credit.
You can’t afford to pay the balance off each month
If you are extremely tight on funds and you already know you can’t afford to pay off new credit card charges each month, you’re probably better off skipping credit for now. The high rates credit cards charge can make it easy to rack up long-term debt if you’re not careful, and all while making everything you buy more expensive in the end.
You lack budgeting skills
If you have limited financial education at the moment and you know you’re lacking when it comes to managing your money and paying bills, you should work on those skills before you get a credit card.
You are at risk of making late payments
While credit cards can help young people improve their credit with responsible use, the opposite is also true. If you know you’re at risk of making late payments that could damage your credit score, you should skip credit for now.
The bottom line
Not only can credit cards offer a convenient form of payment for regular expenses or emergencies, but they help build credit for the future. Many credit cards even offer rewards for spending, which helps students get something back for each purchase they charge.
However, the same risks of using credit apply to everyone, including college students. If you know you’re at risk of overspending, racking up debt or making late payments, you should skip credit cards until you’re in a position to benefit from them.
Frequently asked questions
How many credit cards should a college student have?
College students are probably better off with one credit card at first, especially if they’re just learning to use credit wisely. Over time, they can consider adding more cards based on their needs.
How to get a credit card as a college student?
College students can apply for student credit cards that are geared specifically to young people with limited or no credit. Secured credit cards that require a cash deposit as collateral can also work well for students with no credit history.
What are the pros and cons of credit cards for college students?
Credit cards can help college students build credit, manage emergencies and learn financial responsibility when used wisely. However, they also carry risks like high-interest debt, overspending and potential credit score damage if not managed properly.
