Though it’s never too early to start learning about money management and building the foundations of a healthy credit history, recent information has created a renewed debate about the appropriateness of credit card options for college students. As the new school semester looms for an incumbent generation of first-year college and university students, today’s blog considers the pros and cons of credit access for students.
Should college students get credit cards
A recent survey of 42,000 first-year college students found that the earlier teenagers had access to credit cards, the less prepared they felt for managing their own money in college. The survey and associated study serve to illustrate the point that younger people need to have finite amounts of money to draw from in day-to-day transactions in order to learn essential skills such as budgeting and monitoring their accounts. Credit, of course, operates on a much less restricted system (at least on a cognitive/psychological level.)
How do a student get a credit card with no credit
Parents of students under 21 years of age will need to co-sign on a credit card application, and herein lies a particular kind of risk: if a student who is less familiar with good budgeting practices goes all-out with their card or forgets a payment, the impact on their co-signer’s credit may be significant, in addition to putting the student’s creditworthiness in a hole that needs to be dug out from early on in the establishment of their history.
In short, for students looking to establish financial credentials and independence, good personal finance management starts with the development of sound understanding of credit mechanisms, scoring, payment planning and budgeting both day-to-day and long term. With these skills, students can develop their financial footprint responsibly and reliably and open up more options for future growth.