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Why College Students Need Credit Card

Why College Students Need Credit Cards

Learning responsibility while establishing credit is a rite of passage for most college students. Explore the benefits of obtaining a credit card.

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The transition from high school to college comes with an assortment of new burdens and responsibilities. In all the hubbub to register for classes and work out a schedule, many college students overlook the finer details. For example, how many are preparing for their financial lives beyond graduation?

Not enough, according to recent statistics. Only 56% of college students owned credit cards in 2016. That means almost half of the year’s graduating class entered the professional world at a severe disadvantage.

Credit cards provide immediate and long term benefits. The sooner you get one, the better. Here’s why college students need credit cards.

1. Student Credit Cards Start a Credit History

American society is structured around credit lending. The quality of a credit score can determine where people reside, live, and drive. High credit scores also mean lower rates and more credit capacity, making it easier to respond to financial mishaps.

The fact of the matter is college students need good credit scores, even if they don’t need them right this second. So why not start now? There are many ways to start building credit right out of high school.

College student credit cards are the traditional way to establish a credit history. Even if students rarely use the credit card, they’ll still be better off than those who went without.

The reason is your credit history accounts for 35% of your credit score. So long as college students make payments on time — however few — they’ll be well on their way to a better credit score.

2. College is the Best Time to Build Credit

Many college students are fresh from high school and still live or correspond with their parents. This means they may not immediately need a great credit score in their everyday lives. And since their parents are still in the picture, they can assist with the credit card process.

That’s why college is the best time to get a credit card. It’s better for college students to get a head start on their credit score before they graduate. Otherwise, they may not have the credit they need to move into an apartment or purchase a vehicle.

College students can qualify for student credit cards on their own if they know where to look. Otherwise, their parents can help them qualify by co-signing for the line of credit. They may also have parental oversight to track credit spending and help them learn good habits early on.

3. A Credit Card Can Resolve a Financial Emergency

We’ve all been victims of a financial emergency or surprise. Whether there was an unexpected expense or medial disaster, your credit was there to keep you afloat. Unfortunately, even college students can experience financial emergencies.

A credit card is their first line of defense, especially if they’re living in a dormitory hundreds of miles away. What if a student needs an urgent flight back home or a medical checkup?

Parents aren’t always equipped to disburse additional funds to their children. And even if they are, they may not have a financial system in place to make the transaction. A wire transfer could get the job done, but not without a hefty surcharge.

When something goes wrong, college students should rely on the autonomy of a credit card. They’ll savor the financial flexibility and their parents will enjoy the peace of mind.

4. College Students Need Experience With Credit

As wonderful as credit cards are, they also have the potential to wreak havoc. Poor spending habits, such as failing to pay off the credit card at the end of the month, can lead to mounting debt.

It’s best to help college students acclimate to credit cards early on. Good student credit cards won’t have a massive line of credit. This means if something does go wrong, it should be a relatively easy fix.

What kinds of credit habits should students learn? For one, always pay the bill on time to avoid interest. Most credit cards have personalized payment periods, so be sure to learn the end of yours.

To optimize your credit score, aim to utilize 30% or less of your total credit limit. And lastly, consider creating an emergency fund. This can prevent you from putting massive charges on the credit card and racking up interest payments.

For more information, look at these ways to prepare for your first credit card.

5. Good Student Credit Cards Offer Rewards

Developing a payment history and credit score doesn’t sound fun, does it? Well, there are some immediate perks to using credit cards, too. That’s why they’ve become so ubiquitous in the first place.

Even student cards offer enticing incentives such as cash back or bonus rewards. 1% or 2% cash back doesn’t sound like much. But since college students are always strapped for cash, these perks can provide some rare discretionary income.

Some of the best college student credit cards go even further. There may be cash bonuses for earning a respectable GPA. Others know college students are still learning the ropes and are happy to forgive the first missed payment.

Many of these cards provide 0% APR for a limited time. This can come in handy during the beginning of a semester, covering things like new textbooks and dorm furniture.

How to Get Credit Cards for College Students

The simple truth is college students benefit from the addition of credit cards on their financial roster. But since they have no credit score or credit history, where should they start?

First Financial has done the hard work for you. We’ve discovered the lending institutions open to borrowers of all shapes and sizes, with or without credit. Apply for a credit card and start building credit today.

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