Question

Credit for Students

Credit card vendors are allowed to setup booths on campus at the beginning of each semester. Students are enticed to apply for credit cards through various "offers" (Free tee-shirts, coffee mugs, etc.).

Is this a good thing? Discuss your answer in terms of what the students get, what the vendors get and what the campus (student organizations) may get.

In addition, with all this "getting", are there any potential problems?

Answer 1

Lessons to learn from having credit cards in college campus

You have more lessons to learn in a class room but you have no lesson to learn how to manage your credit card wisely. You should learn to manage a credit card before you dip in to a the into the pile of debt. Many learn to manage a credit card only after they are in debt trap.

Problems on Having Credit Cards

There are many positive and negative effects of having credit cards. Be responsible with a credit card is not having trouble by the use of credit cards. Before initiating to use credit card one must know the good and bad side of handling a credit card

Builds Credit

Credit cards are the best way to start establishing a credit history. To build your credit score, you need credit; therefore, getting a credit card while still in college is a simple way of doing this. The fact is that a major contributor to your FICO score is your credit history length. Obtaining a credit card while still in college helps you begin building your credit history so that when it comes time for you to require credit to obtain your first mortgage, you will not have a problem obtaining a loan.

Alternative to Carrying Cash

These days, not many people carry cash and college students, in particular, are not likely to deal with paper currency. If you do need cash, however, and don't have an ATM near you on campus, reaching for your credit card can help you if you are in a bind.

Avoids Identity Theft

Identity theft and fraud have increased dramatically with the rise in technology. You leave yourself more vulnerable to identity theft by making online purchases with a debit card instead of a credit card. If a thief does gain access to your debit card, it is too easy for them to drain your bank account. With a credit card, they are only racking up fraudulent charges that you can dispute and have removed.

Cons of Having Credit Cards

While there are many advantages to having one or more credit cards, you should also be aware of their significant drawbacks.

Forget to Track Spending

You can get yourself into serious financial trouble if you fail to track your credit card purchases. Typically, this results in a huge bill at the end of the month that you are unable to pay in full within your billing cycle. If you continue this pattern, it can lead to a hefty debt that you will have a hard time paying off.

Forget the Bill

No doubt you are very busy in college going to class, juggling homework, and keeping a part-time job. With so much going on, it does not take much to forget little details like paying your credit card bill. However, when you fail to pay your bill on time, it can damage your credit score tremendously. That might not hurt you too much while you are still a student, but it can put you in a negative position as you begin your new post-graduation adult life. This will make it more difficult to get a car or home loan and to get a great rate on that loan.

Open Too Many Cards

Too often, college students sign up for every credit card offer that falls in their lap. When you have too many cards, it can make it overwhelming to track your spending, pay your bills on time and stay out of debt.

Using Credit Cards Wisely

To keep yourself out of credit card debt and keep your credit score in check, you need to stay on top of your bills and pay them in full and on time every month. You don't use a credit card any differently than you would your debit card, except for how you pay it at the end of each month. With a debit card, your money automatically gets pulled from your bank account at the time of your purchase, but with credit cards, it's up to you to pay the balance, which can add up quickly.

The bottom line is this. You can establish credit responsibility and you should. This will set you up with a strong credit history so you can continue down your path as an adult with sound financial habits.

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