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College and Credit Cards: The Debate between Students and Parents

By Chris Bibey

There are millions of college students spread from one side of the country to the next. The majority of them are strapped for cash. Some of them learn to live with less. Others make the mistake of opening a credit card.  If you are a college student, or recently graduated, you may recall asking your parents for a credit card at some point during your time in school. At the time, you surely had a good reason (at least in your mind) for doing so.  Some college students have a hard time understanding why it is a bad idea to carry a credit card. They think this is a way to better their life, both financially and socially. Of course, nothing could be further from the truth.

Student credit cards are a bad idea for the following reasons:

1. They are not always used how they are intended. Suppose a parent says, “Only use this credit card to purchase books and school supplies.” Sounds simple enough, right? While this may work for a few weeks, soon enough the student will stretch the limits and hope their parents don’t find out. Even if you trust your child, you never know when they will breakdown and use their credit card on an item that is not a necessity. This is the mind of many college-aged kids!

2. They are entirely too easy to use. You can pull-out a credit card at anytime. If you want to shop online, at a local mall, or at a restaurant, plastic works the same way. It only takes one lapse in judgment to run up a huge credit card bill.

3. Most students do not fully understand the consequences of abusing a credit card. They probably know they will owe the money at some point in the future, but do they know just how much interest can add up in a short period of time? Do they know that paying late can drag down their credit score before they enter the real world?

Reminder: There is legislation (part of the Credit Card Accountability, Responsibility and Disclosure Act of 2009) that prevents anybody under the age of 21 from receiving a credit card. The only exceptions are those who can prove adequate income, or find somebody to co-sign.

I think you get the point.  I don’t believe it is a good idea for students to carry a credit card. Simply put, there are too many potential drawbacks without any possible benefits. Judging by recent legislation, it is easy to see that I am not the only one who feels this way.

What do you think about students and credit cards? Did you have access to plastic while you were in college?

Editorial Note: The editorial content on this page is not provided by any bank, credit card issuer, airline, or hotel chain, and has not been reviewed, approved, or otherwise endorsed by any of these entities. Opinions expressed here are the author's alone, not those of the bank, credit card issuer, airline, or hotel chain, and have not been reviewed, approved, or otherwise endorsed by any of these entities.

Chris Bibey
Chris Bibey is a freelance writer who over the years has honed his personal finance experience by writing more than 100 feature articles on the subject. In his spare time, Chris enjoys sports - West Virginia football in particular!

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  • gina

    I agree. It is way to easy to get into the credit trap when you are young! Best to use a debit card, then you will feel the pain before it is too late!

  • http://lifetuner.org Keith Morris

    I posed this question to finance experts on LifeTuner (http://bit.ly/98NRXN): If someone lacks the responsibility to manage a credit card, isn’t this just delaying an inevitable disaster? Would it be more effective to focus on education instead? IE: require a permit that you only get after you pass a finance course before you can obtain a credit card?

  • http://pennycouture.wordpress.com Caity@PennyCouture

    I’m currently in college and I have a credit card — two, actually — which are paid off in full from my checking account each month. I put almost all of my spending on the card — groceries and textbooks, for instance — and have also never paid an ATM fee.

    I agree that it’s easy to abuse a card, and many students don’t understand fiscal responsibility, but the real key is someone, whether a parent or program, teaching each and every kid about money. Credit card companies are partially responsible for student overuse, of course; my 18-year-old self was shocked seeing a $4000 credit limit, but at some point personal responsibility has to kick in. Call me pro-plastic, but I see a lot of benefits from use — security if mugged, rewards points, building a credit history for a mortgage, etc.

    Being a student, or not being a student, isn’t the determining factor…
    It’s easy to spend in college, but it’s just as easy to spend with the reassurance of having an “income”, however little may be left over after taxes and rent. Credit is risky, but worth an individual decision.

    • http://www.frozenactivist.net Tonei

      I second this comment – I’m a sophomore in college and got my first credit card at the end of my senior year of high school. I now have four credit cards – two are student-specific cards (Citi’s mtvU and Chase’s Amazon, though I don’t use the latter anymore) and the other two are travel rewards cards (BofA’s Alaska Airlines and Chase’s Amtrak). They all get paid automatically from my checking account every month, and the two or three times where I’ve screwed up that system I’ve always been able to talk my way out of the late fee. I almost never use cash, so I just follow my parents’ example (they have $0 personal debt and have as long as I can remember) and reap the rewards.

  • Emily D.

    I am so thankful my parents modeled good credit card behavior throughout my life. They never used their cards for things they couldn’t pay for in cash and always told us to do the same. I had a card linked to their account and my own when I was in college. It was easy to not abuse my parent’s card since they saw the bill and I would have to pay back anything other than books and groceries. It was also easy to not abuse my own. It took a few years before I realized how most people abuse cards, it never even occurred to me that you could buy things outside of your means and not pay off the entire balance. Thanks mom and dad!

  • David @ MBA briefs

    Excellent topic – I’m a USAA member and set up a separate checking account for my son who is a college freshman. USAA gave us a credit/debit card for him to use, so he can withdrawal cash ATM-free or use the card for credit purchases.

    I think this gives us the best of both worlds, we can make credit card purchases without worrying about credit interest, and our cash withdrawals are reimbursed up to $15/month.

  • Chris

    I think its really a case by case basis. It depends on how fiscally responsible the student is, if they know the pitfalls of getting into debt. If you are a student and are fairly smart regarding your money, I don’t see why they shouldn’t be able to get a card.

  • http://madsaver.com Mac

    You know, I don’t remember owning a credit card until my senior year in college. Good thing too…there were a lot of cc companies on campus trolling for freshmen. Each were giving away some worthless trinket in return for your signature to pay high interest each month.

  • http://moneycrashers.com Chris

    All the comments, thus far, have been great! I particularly enjoy this one by Caity:

    “I agree that it’s easy to abuse a card, and many students don’t understand fiscal responsibility, but the real key is someone, whether a parent or program, teaching each and every kid about money.”

    • http://madsaver.com Mac

      Yes, that was a good comment. I think it is a parent’s responsibility to teach their own kid about the value of money by the time they enter high school. If they really want something, they need to work for it and NOT buy stuff on credit. If they can pay the balance off each month, fine, but most teenagers can’t handle plastic.

  • Winston C

    Right now, I am a college student. I have one credit card and that’s all I will ever need. Whenever I make a purchase, I will make sure that I have money in my bank account to pay off the balance. What I really like about using credit cards is the reward points. I get like 3% cash back for certain purchases. But I only use credit cards at stores owned by big companies, and not family stores because there are processing fees associated with using plastics. I work in a family store, and my boss often complains how banks take too much money off those card purchases. So I try to look out for the small guys.

  • http://www.buildingcreditforstudents.com/ Building

    the new credit card act may be bad news for some students who are below 21 yrs old simply because they can not acquire a student credit card without a co-signer or proof of independent income. However let’s consider the benefit of it. A credit card could actually help a student discover the true meaning of becoming responsible but let’s not neglect that many people who suffered bad credit as a consequence of wrong credit card use. Bear in mind that how you manage your account can affect your credit rating.

  • http://www.buildingcreditforstudents.com/ Building

    acquiring a student credit card is a great start in creating your credit score. Nevertheless , you should learn first how to manage your finances properly so that you can pay off your bills regularly by the due date. You should be responsible in your spending habit to not have debt issue and pay out high interest rate.

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