News stories and surveys show the average American is burdened by credit card debt. It may seem odd that we encourage college students to open up a credit card but hear us out. We recognize the potential pitfalls that out of control spending can have, but when used responsibly, a credit card is a steppingstone your child needs to become a credit carrying consumer.
Here are four reasons why your college student needs a credit card.
College Students Can Build Credit
With great power, or in this case, purchasing power, comes great responsibility. Making sure your child understands interest and the importance of not spending more than you have, is how they can show you, and credit agencies, that they are responsible. No credit is not nearly as bad as a credit history gone awry, but it’s not much better. It may be harder for them to secure a credit card post-college so building credit at an earlier age can ensure credit continues to be available as they enter their early 20’s.
Credit Cards Bring Increased Purchasing Power
College expenses can add up fast, especially when the price tag of a PC or laptop is concerned. A credit card from RMLEFCU will gibe your student the ability to buy the necessary technology to complete their coursework online or off. Don’t forget the laptop warranty with today’s on-the-go students. Moving laptops from place to place increase the chances of damage and even theft. For theft recovery software, click here.
There’s a Paper Trail
Credit card transactions will always see the light of day with detailed statements. There is no need to keep receipts or wonder where all of their money goes when there’s an electronic record. You and your college-age student can easily spot where the bulk of their money is being spent, so a correction can be made, if necessary. There’s also the accountability factor of a credit card statement. When your student uses cash, the pain of purchase is fleeting and occurs within moments. With a credit card, they are forced to reckon with the purchase for at least a month and be reminded of its’ utility, or lack thereof, when they see the description on their credit card statement. For a detailed explanation of the type of expenses college students should plan for, see our earlier post “How to Create a College Budget”
Credit Cards Offer Assurances Cash Cannot
If you lose your credit card or it is stolen, you can call RMLEFCU and we will make sure to put a stop on all purchases. Compare this to what happens if you make all of your purchases using cash. There is no bank-backed guarantee and the chances of recovering your lost or stolen cash are slim to none.
A credit card builds the credit you will eventually need to for loan approvals for a home or car, it allows you to afford big-ticket items that you need but are otherwise unable to buy without the ability to pay it back later, we see you unanticipated car repair and credit cards offer accountability and assurances that keep us in line and protected from financial loss. For your son or daughter just starting out, RMLEFCU recommends our classic VISA credit card with no annual fee and a low APR. See all of our credit card choices here.