College Students and Credit Cards

It is always scary when anyone abuses anything, drugs, alcohol, or another person. But one thing parents can have the most influence with their child is their education in using credit to a healthy advantage instead of the alternative. But to be honest, the parent’s knowledge in using credit must be set to a good example and that is not always the case. For example have you figured out how much you pay for a $100 item at 18% interest over a year if you never pay that total off? That $100 grows to almost $618 owed in 12 months, over six times the original $100 spent. Sure we all believe at the time of purchase we will pay it off after our next paycheck. But do you truly balance it out of your next paycheck at the purchase time?  No…  as most of us you probable pay close to the minimum payment every month, finally paying that $100 purchase off months down the road, making it a $300 or $400 purchase or more. This example shows the advantage of buying when you have the cash or with a debit card (but warning read below), or doing without if you don’t have the funds. You will be a lot richer in the long run I promise, plus you will learn to save for what you really want. A lot of students never learn that lesson thus never curbing their impulse buying. Credit is a good thing until it turns ugly and then you are forced to live within a budget or worse claim bankruptcy.

Let’s face it students need credit because they don’t always have cash. College students need credit because credit cards are protected against loss ($50 if reported stolen within two days), where stolen debt cards can lead to an empty bank account. Today students are responsible for more internet sales than ever before, buying books, clothes, music, movies, and the list goes on and on. This growing trend is opening them up to more fraudulent activity but it is the easiest way to buy anything anywhere, in the store or through internet purchases.

The good side of credit is that when favorable, it leads to more credit for such needs like emergencies, car and home purchases, and the like. A good credit history with low debt balance to available funds, and a long positive payment history, makes banks want to lend to you. Which means promising things to recent college grads in new jobs and new apartments; it also means less dependency on parents to get young adults out of financial jams. So parents need to be smart with credit and teach your children by example, it will save you headaches from worrying about your children’s financial health through early adulthood!