Should Your Student Have a Credit Card in College

If you have a college student or will in the near future, something on your mind is whether or not they should have their own credit card.

The reason you’re likely asking yourself this question is that you know credit cards can be extremely beneficial in certain situations. Yet they also have the potential to become financial burdens. To best answer this question, begin by reviewing some benefits and challenges of your college student having their own credit card.

Benefits of Having a Credit Card

As a parent, you want nothing but the best for your child. Throughout their lives, you’ve been able to provide for and protect them. When they are in college, you aren’t there to help them as quickly as before. That is where a credit card can provide peace of mind for you and your child.

• Emergencies: Should unexpected expenses arise, such as a car breaking down, a credit card would provide the ability to pay for repairs immediately. This is extremely helpful if they are unable to get into contact with you right away.
   

• Supplies: Students will need to purchase books and other materials for their classes throughout college. A credit card would ensure your child will not fall behind in their classes because they cannot buy the required supplies.
   

•  Credit History: Time spent in college is an excellent opportunity for your child to build their credit history and score. This will be helpful when they purchase a car or begin looking for an apartment or home after graduating.

While these are obvious benefits, what is likely keeping you on the fence are the potential negatives.

Credit Card Challenges

It’s no secret credit cards can become tempting, especially to those without first-hand experience managing debt. You may be worried that they will fall into the trap of frivolous spending or purchase items you wouldn’t approve of, such as expensive computers, phones, or even trips with friends.

However, college is a time when many young adults will open their first credit card, frequently without parents knowing. Being hands-on in their decision to get a credit card will allow you to help them make smarter decisions and understand the importance of managing their credit card use.

Be Proactive With Credit Cards

Being part of the decision allows you to help them avoid the harmful pitfalls of credit cards. Aside from simply providing guidance on spending and managing debt, there are two strategies to help keep spending under control.

1)  Request a Lower Credit Limit 

When applying for their credit card, start with a lower credit limit, such as $500. A lower limit will not be able to amass substantial debt and will have smaller, more manageable monthly payments. If they need assistance, the balance would be low enough that you could step in and help without burdening your own finances too much.

2)  Open a Secured Credit Card 

A secured credit card acts exactly like a normal credit card, but with one key advantage. You or your student will put money aside with your financial institution to cover the balance of the credit card, for example, $500. If they are unable to make the monthly payments, the financial institution will use the money set aside to make the payments. This is a perfect option for those just learning to manage credit card debt. 

We’re Here to Help!

Not all credit cards are the same. Be sure to review all features and avoid high-interest rates and other hidden fees. These costs can lead to even more financial hardships. 

Genisys offers low-rate credit cards without high fees and we even have secured credit cards. Card Controls is our app used along with our regular mobile app to set custom security and spending alerts and restrictions to help keep your cards safe and even stay within a set budget. To learn more about our credit card options, stop by any branch location or learn more at genisyscu.org.

« Return to "Blog"