Student Credit Cards
The Benefits of Student Credit Cards
These days, low-limit student credit cards are becoming more popular; as parents seek to endow their children with the ability to learn fiscal responsibility and deal with unexpected emergencies. When used improperly, these lines of credit can cause problems; however, when used appropriately, they can provide students with considerable benefits that can help them cope with new, intimidating challenges as they transition into adulthood.
Learning financial responsibility
A great many older Americans have considerable difficulty controlling their spending and staying within their means. By managing a credit account with a set spending limit, students are able to learn the importance of managing limited resources and living within their means at a young age, when consequences associated with mistakes aren’t typically as severe.
Building a credit history
One of the most difficult parts of building a strong financial standing is the fact that it usually takes credit to build credit. When students obtain credit cards and use them responsibly, they are able to establish a better credit-to-debt ratio, which will ultimately allow them to secure future credit accounts, such as car financing and home mortgages.
Many student credit cards provide programs that offer rewards and cash back. Students can use this cash or accrued reward points to purchase school supplies, text books, and plane tickets to return home for visits.
Help with emergencies
College students are notorious for being poor, and when faced with unforeseen emergencies, many are left scared, confused and helpless without any means to cope. Will your child be able to secure help in the event of a car wreck? If the cost of his or her book or food expenses exceeds the funds offered by Pell grants; will your child be able to cope with the extra expense? Students with relatively small credit accounts have the necessary resources to deal with adverse circumstances when they arise; while those without them often end up stranded or forced to do without.
Making a Good Decision
Many parents resist the idea of their children securing student credit cards, because they fear they’ll mismanage the accounts and accrue too much debt; however, whether they open an account while in school or shortly after they’ve graduated, students will have to learn fiscal responsibility at some point. By getting a card with a low limit while in school, students are able to learn how to responsibly manage their finances before they’re encumbered with expensive mortgage and car payments post-graduation.