If you’re a parent of a college student it may be a source of great anxiety. If you’re a student getting ready to start the next stage of your life, it’s another piece of freedom that you have been waiting all of your life to gain. What is it? Your first credit card.
College student credit cards have been the subject of debate and controversy. Some argue that credit card companies are targeting the less than responsible spending habits of college students. They’re offering students a credit card knowing that money will most likely be made in finance charges, late fees, and high interest rates. Additionally, colleges and universities often receive kickbacks from the credit card companies for allowing them to set up booths on campus, send offers to students and parents on the university mailing list, and give students the offer they can’t refuse. Colleges and universities selling student information to credit card companies is sometimes seen as a conflict of interest.
Others argue that learning to spend wisely and hopefully build a credit history should start as early as possible. If a credit card with a responsible limit is established, it may be the perfect time to build a positive credit report especially when most students aren’t bogged down with other financial obligations like house and car payments and the expenses associated with having a family.
If you believe that college student credit cards are right for your child, there are a variety of options available in two major categories. First, if an actual unsecured credit card is desired, very attractive cards geared towards students can be found. Some give extra rewards points for the types of the typical college student purchases like books, music, movies, and food and normal points for all other purchases.
The interest rates on these cards are at a manageable level but like any credit card, students should practice good credit habits by paying the full balance at the end of each billing cycle. Many cards have an introductory rate as low as 0% and no annual fee.
There is another class of college student credit cards that aren’t actually credit cards but represent an option with less risk of abuse or irresponsible spending habits. Parents can take out a prepaid credit card where a set balance can be added to the card at selected intervals. This does not build a credit history but prevents the student from getting overwhelmed with credit card debt.
Many of these prepaid cards come with helpful benefits including no annual fee, free automatic bill pay, and free e-mail and text messaging alerts with information on the card’s current balance. Additionally, places like Western Union and many others serve as places where money can be added to the card.
Legislation protecting college students from unlawful credit card practices has been proposed but if you believe that a college student credit card is a good idea, many options are available. As always, going to one of the many popular websites that compare the numerous credit card offers is the best place to get started.