Over the past few years there’s a trend online of financial experts recommending college students get credit cards. Is this really a good idea?
This strain of advice usually includes some of the following arguments:
- Having credit helps establish a good credit history.
- Using credit early is educational and can teach the user how to manage debt.
- Making purchases online is more secure with credit cards.
We can see the wisdom in some of these arguments, but while they may be good reasons to use credit in general, we still think it’s a bad idea for college students to use credit cards:
- Credit cards should be avoided unless the cardholder has steady income and can afford to pay the balance in full every month. College students lack the necessary income to remain balance-free, and tend to pay the minimum monthly payment. Unless you’re the rare college student who has the income to afford to pay off the credit card balance every month, you shouldn’t be using credit cards.
- College students should use credit cards for emergencies only. In practice, this is rarely the case. We say listen to our friend Paul Richard of the ICFE: “If you can eat it, drink it, or wear it, it’s not an emergency!”
- Debt is the #1 problem facing college students and graduates these days, and they should not be adding to their debt burden with credit cards. Bad spending habits today can lead to long-term negative consequences. If you’re relying on student loans for any part of your college expenses, then avoid adding to your burden with credit cards.
If you’re determined to obtain and use credit because you want access to the advantages listed above, be very careful. Only get one credit card (it’s all you need to establish a credit history), and keep the balance paid off every month. Our standard advice is to get a gas company credit card and use that to fill your tank—then you have regular purchases to build a credit history that won’t grow out of control.