The Pros And Cons Of A Student Credit Card
There are plenty of ways that a student could benefit from obtaining a student credit card. It is a great way to begin learning how to properly budget your finances to avoid debt. At the same time, debt may be the very reason a student would want to avoid a credit card. It is known that many credit card companies wish to provide cards to student with the understanding that they would use it irresponsibly. That may not sound beneficial for the credit card company, but the truth is that a card user in debt is worth more to the credit card company than someone who pays their monthly amount without hesitation. The credit industry is very different than it once was.
The Benefits Of A Student Credit Card
Though credit cards can be dangerous in the hands of an inexperienced young adult, they can also be very beneficial for learning how to live independently. For instance, a low limit student credit card will remove the temptation of large spending while still introducing the student to the world of credit and loans. A card with a low limit can be used frugally and the payments should be fairly easy to pay off in a timely fashion. This may also help to build credit. It is also recommended that a student enroll in a finance course. This will help the student to understand the differences between necessities and luxuries. A credit card should be used with the goal of obtaining a good credit score for future use. Every purchase made with the card should be planned to fit that goal.
The Dangers Of A Student Credit Card
People who are in debt tend to stay in debt. There are annual fees and penalties assigned to those in debt. This makes it even more difficult to get out of debt. This situation is often referred to as revolving debt. People with revolving debt are more valuable to the credit card company than the people who pay their debt on time. Credit card companies know that college can be a wild time for a young adult. They also know that a college student may use their card irresponsibly and wind up in debt. Not every credit card company is out to hurt the card holder, but it is a fact that debt creates revenue. These companies are also aware of the fact that most people will continue to use whichever credit company they start with. This means that a student with a particular credit card will likely become a long term card holder with that company.
Use A Student Credit Card Wisely
Student credit cards can be very useful. They are great for emergencies and ordering expensive textbooks and school supplies. Most students are far from home when attending college. This means that having a credit card is often necessary for them to get by. The most important thing to remember is that a credit card is not a toy. If a credit card cannot be used responsibly than it should not be used at all.
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