Student Credit Cards Taking the Plunge

Eric found himself stranded in a small town in Indiana with no cash and a fuel gage that read empty. He swiped the credit card that had been offered to him a year prior while a freshman in college. The card was rejected, for he was over his limit.

Luckily, a kind stranger took pity on Eric and bought him a few gallons of gas so that he could make his way home. The stranger also handed Eric a pamphlet on the responsible use of credit cards, including information on the benefits and pitfalls of credit.

Credit Cards Build Credit History

Perhaps the most beneficial aspect to student credit cards is that they help young people build a credit history. Responsible usage of the cards allows students to buy large consumer goods and houses several years in the future.

They Help in Emergencies

Credit cards can be extremely useful in emergency and travel situations. However, as Eric found out, once a student exceeds his credit limit the usefulness of a credit card is little.

They Can Teach Responsible Credit Management

One can argue that a student should already be responsible before taking the plunge with a credit card. However, even responsible students ought to learn how to properly manage credit and money. Student credit cards can provide this opportunity while keeping the credit limit low.

Furthermore, a student can track all of her expenses with precision with her balances and statements that are posted on the bank’s web page. If a student is vigilant with the amount that she spends, she can learn about budgeting and spending less than the money that she earns (or has through loans or gifts from parents).

There is a Danger of Overspending

Without careful oversight, a student can quickly spend more than his income justifies. The credit card is sinfully easy to swipe to obtain the particular need (or want), and the student may not have the same feeling of regret that she might have had were she to spend cold hard cash to purchase the trinket.

If this is the case, it may be better to have a credit card but save the usage for emergencies only. Sometimes the old fashioned weekly envelope system of cash may be the best practice.

Watch for the Danger of Debt Slavery

As the ancient proverb states, “The borrower is slave to the lender”. Running up huge balances, missing payments and other irresponsible use of student credit cards can plague a person for years after the poor decisions have been made.

Once the cycle of late fees and high interest charges has started, it can be near impossible to get free from the bondage of the heavy debt. Federal legislation enacted in 2005 ended the practice of vacating credit card debt in bankruptcy, stiffening the consequences of poor credit card management.