Should College Student Have Credit Cards? Pros and Cons

As students graduate high school and head off to college, they are likely to come across a handful of enticing credit card offers. You might be wondering, should college students or freshmen have credit cards? No matter how amazing the offer or rewards perk may be, there’s a lot to consider before handing a credit card to a college freshman. 

The Pros of Credit Cards for College Freshmen

Giving your new college student a credit card can give you peace of mind—as long as the card is being used responsibly. Here are a few reasons you may want them to have a card.  

It Teaches Financial Responsibility  

For many students, life as a high schooler was free of bills. They saved their money from a part-time job and spent it on whatever random entertainment they wanted. College is the first step into the real world, which can be an expensive place. By learning how to use a credit card for necessities and paying off the balance on time each month, students can learn how to be responsible for personal finances. 

It’s Nice to Have for Emergencies  

Having money readily available in the event a crisis arises—such as a car breaking down or needing to fly home during an emergency—puts both the student and parents at ease. 

Cards Are Safer Than Cash  

Carrying around cash or leaving it in a shared and unlocked dorm room can be risky. If a credit card is stolen, you can easily report it to the bank and get a new one in the mail. You may also be refunded for the fraudulent transactions reported.  

Convenient For Both Students and Parents 

Credit cards can be convenient for parents helping their children pay for necessities at school. The student uses it; the parents get the bill. It’s easier than making sure the child’s checking account has funds or sending cash. 

You Can Monitor Activity

If you have co-signed for your child’s credit card, you will both receive a copy of the monthly bill. You can make sure your student is using the card for what you have agreed upon, and he or she can’t raise the limit without your knowledge. If your child is the one in charge of paying the monthly bill, you will be able to see on the statement whether payments occur on time. 

Read here for more specific information on which credit cards are best for college students. 

The Cons of Credit Cards for College Freshmen

While credit cards can be highly beneficial for incoming college students, they can do more harm than good when handled incorrectly. Here are some key things to keep in mind. 

Can Add to the Student’s Debt 

A 2022 survey from U.S. News found that over 67% of college undergraduates own a credit card in their name. Approximately 46% of respondents had credit card debt and 27% had credit card debt over $2,000. Add this to the federal student loan debt averaging $37,574 and the private student loan debt averaging $54,921 per borrower, and it’s not surprising the American dream of financial independence is getting further and further out of reach for many. 

Rising High Interest Rates

Credit card companies will often reel college students in with low teaser rates that end up rising higher than regular cards after the introductory period ends. This can put your child at risk of falling deeper into credit card debt. 

It’s Easy to Get in Too Deep  

A lack of money management skills combined with an unclear picture of how easily debt can snowball is a dangerous mix for most students, because they can quickly get in over their heads. After all, a young adult juggling multiple responsibilities can easily lose track of finances. 

What You Can Do

If you feel that a credit card is an important and useful tool for your child to have as he or she enters college, consider taking some steps to minimize the risk of misuse. 

1. Set your own limits that include paying the balance in full each month or limiting purchases to college-related expenses or emergencies. (Pizza is NOT an emergency!) 

2. Thoroughly explain interest rates, penalty rates, late fees, and the pitfalls of only paying the minimum monthly payment. 

3. Have your child download a bill reminder app to his or her phone to avoid missing payments. 

Alternatives to Credit Cards

Many parents choose to send their college students to school with a debit card instead of a credit card. When linked to his or her account, it’s easy to transfer funds when needed, and if deposits are on a strict timetable, the student will have to learn how to budget. Prepaid credit cards are an option as well.  

If you feel your college freshman isn’t quite ready for the responsibility that a credit card brings, it may be most beneficial to begin with a prepaid card with a low balance. Ultimately, your child should begin building responsible financial habits before stepping out into the world, and with the right precautions, they can have the financial skills needed to succeed in the future.