There are certain benefits that students can accrue from judicious use of credit cards, but the record of student use of credit cards tends to tip the balance against them. The majority of students lack the financial experience to handle credit cards responsibly and thus tend to regret falling into the credit card trap. Indeed the position was proving so problematic that the matter was addressed in the credit card reforms of 2010, limiting student credit cards to those with either a responsible co-signer or proof of income.
Student credit cards can be a great tool for establishing credit history, but if used unwisely will pave the way for a bad credit reputation which can present future difficulties. However some students have received responsible fiscal advice, either through financial education or by prudent financial habits instilled by parents. In such instances credit cards can prove beneficial providing the student adheres to financial disciplines and uses them with the sole intent of establishing credit and utilizing cash backs or redeemable reward points.
The wisdom of arming students with credit cards depends entirely on the individual student, as no one size fits all when it comes to credit card use. Students may be encouraged to open a credit card account simply as an emergency measure. However if everyday expenses are deemed to be emergencies then credit card spending can spiral out of control, leaving no emergency balance in sight.
One of the most vital lessons a student can profit from during college days is learning to live within their means. The ease of credit tends to negate the value of this lesson by providing a handy get out clause that obscures the necessity of juggling a budget. If a student can adapt to living frugally in college without relying on credit, they are more likely to graduate unimpeded by more than student loan debt.
As interest rates on credit cards are almost invariably higher than interest rates on student loans, those who graduate with credit care debt are obliged to tackle this debt to the detriment of disposable income which could be used towards paying down the principal on loans. With the reality of suddenly paying back credit card debt at the same time as coping with student loan repayments, a graduate can find a fair proportion of income going directly to service debt.
Students who are considering using credit cards should take the time to understand their workings and the various clauses in the terms and conditions. For all but the most prudent of students who have already acquired some fiscal education credit cards can represent a risk not taking, which is why the ease of obtaining them has been curtailed.