Credit cards have developed a bad reputation over the years. They are often equated with impulsive spending and high interest rates that make it difficult to pay off debt balances. Many individuals get their first credit cards very early in their adult years, and this may even be once an adult enrolls in college. While some people say that young adult college students should not have credit cards at all, but others point out that there are some benefits that college students may enjoy when they use credit cards strategically.
Young adults generally have minimal or no credit history. Credit is necessary to obtain a home mortgage, a car loan and more later in life. It also may be reviewed when you apply for a job, buy insurance and take other steps. Through the savvy use of a credit card, you may be able to build a good credit rating over the next few years.
Learn How to Manage Finances
Many college students who obtain a credit card qualify for a relatively low credit limit. While there may be a concern about getting burdened with debt, you can control your debt balance by only applying for a single credit card. Through this account, you can learn how to properly manage your finances and how to use credit cards intelligently without drowning in debt.
Monitor Your Credit Rating
Some credit cards provide account holders with the benefit of free credit monitoring. In fact, you may only have to log into your account online to check your credit scores at any time. This is opposed to obtaining your free credit report from each of the credit bureaus annually.
Have a Financial Backup Plan
The best idea for a financial backup plan is to have a well-funded savings account. However, many young adults have not had time to sufficiently build up a savings account balance. When you avoid maxing out your credit card and keep a decent available balance, you may be able to use your credit card as a backup plan until you can increase your savings account balance.
Many credit cards have a rewards program. You can typically earn points through your purchases, and this can provide you with cashback, airlines points and more. Many young adults are big consumers. After all, you are just starting out in life, and you need to buy everything from your first vacuum cleaner and sofa to books for school and more. Rewards can accrue and can benefit you financially.
While your use of credit cards can get out of hand and can lead you to financial stress, you can see that credit cards can be used strategically in your college years. If you plan to apply for a credit card, understand the benefits and pitfalls so that you can maximize the advantages.