Student Credit Cards

Benefits of a Credit Card for College Students

from a Parent's Point of View

College life is the time for your son or daughter to establish freedom and individuality – and a time to start establishing a good credit profile. College students are a big target for credit card companies. However, with the right attitude and strategy, your student can receive many benefits from a credit card as a new consumer in the spending world.

1. Establishing Good Credit
   The most important benefit of acquiring a credit card as a student is the chance to firmly establish a credit history. Believe it or not, the first steps taken with a credit card can determine a credit history, good or bad, for possibly decades to come.

   An excellent strategy for your student is for him or her is to make small purchases and pay them off immediately, usually within a month. First, small purchases keep the available credit higher, and that’s a positive mark on a credit report. Second, making frequent payments to keep the balance at zero or just above zero shows that your student “pays as agreed” on his or her report.

2. Low Interest and No Annual Fee
   Many credit card companies that offer deals with a zero percent introductory offer and zero annual fees. These benefits can help your student start smart by not being saddle with excess costs when using his or her first credit card.

3. Budgeting and Financial Management
   Credit cards come with new responsibilities but they also offer good financial practice. Once they have a credit card, students must learn to budget and prudently manage their finances. Help your student set up a spending guideline that can be met each month. The figure takes into account what type of expenses should be charged, how much money should be used toward credit card debt, if applicable, and, regardless of the credit limit, the most they should charge on the card each month in your view.

4. Low Initial Credit Limit
   Often, credit cards for college student will come with a low limit, which helps prevent overspending and overcharging.

5. Financial Buffer
   Students often run out of money. Having a credit card for the first time can be a financial “buffer” for when they need a tank of gas to get home or a sack of groceries after they have spent their monthly budget.

6. Convenience
   Convenience is another benefit of credit cards. Charging gas, textbooks, or even groceries keeps students from having to carry cash all the time. However, be sure to help your student keep careful track of all receipts so he or she does not overspend.