Student Credit Cards Build Financial Foundations

Student credit cards are often perceived as a lure to get young adults in a cycle of debt. While it is true that the result of students using cards irresponsibly can be disastrous, it is also true the student cards can be beneficial to young adults just establishing their foundation of good credit.

Here are some of the ways student cards are key to building a good financial foundation:

Credit History Starts Early

Student credit cards cater to college students just starting out on their own. It is an ideal way for a student to establish a credit history early. A long financial history is just one element of a good credit score. Student cards report back to the major credit reporting bureaus and the information about how the account is handled is kept on file for review by other creditors.

Student Incentives

Since student credit cards were designed to cater directly to the needs of young college students, many card companies offer incentives that benefit the student financially. Some of the incentives include discounts for shopping, book and supply purchases, entertainment, gas purchases, airline tickets, and even cash back bonuses. Some credit card companies even grant additional incentives for academic achievements.

Emergency Resources

Students living away from home for the first time will have the advantage of emergency funds when mom and dad aren’t around to help. A student credit card can be the right resource for emergency purchases while at school or when traveling back home.

Lessons in Financial Responsibility

As most high school students do not get a personal finance education in school, a student credit card is a good way for a young person to learn how credit works and the importance of financial responsibility. When young adults are not exposed to the ways of the credit world in the right manner, they are apt to become adults with credit and debt problems. Utilizing a credit card for small purchases and paying off the full balance at the end of the billing cycle is an excellent first lesson in being a responsible credit card user.

Bigger Credit Limits

When a student uses a credit card in a responsible manner throughout college, the credit card company will likely permit a larger credit limit for after graduation when most adults need financial back up starting a new life. Using a credit card wisely as a student can grant you not only a secure financial foundation but also the credit availability when you need it most.

New regulations about how credit cards are approved include the requirement that all credit card applicants must be aged 21 or older without a parental co-sign. It can be good practice for students to share a credit card with their parents and learn the realities of credit at a young age. For college students who are financially independent, cards can be approved for those under 21 provided there is proof of income and a reasonable belief that the young card holder will use credit responsibly and pay balances in full.

There are plenty of student credit cards to select from these days. It is important to review the incentives and terms of several cards before making a decision. Since student credit cards offer different type of rewards, it is important for a student to choose the card that makes the most sense for their spending habits and lifestyle in order to get the maximum benefits a student credit card has to offer.