Student Credit Card Costs For College–What Options Parents Have For Offering Credit And Avoiding Financial Troubles

As students prepare to enter their fall semester at many colleges and universities across the country, parents have either been considering or hope to soon provide their students with a credit card for various costs that may arise during the school year, as anything from food to books may necessitate that students spend out of their own pocket rather than use financial assistance funds, and obviously, some frugal students have kept their student loan borrowing to a minimum and, as a result, may not have the funds to meet certain additional costs. Yet, there are also parents who are getting these cards for their student simply as a way to help them if an emergency were to arise, but many officials are urging parents to look at not only the types of student credit cards that may be available, but also what the cost of these credit cards will be.

Furthermore, parents need to understand that there are different types of credit cards that may be available for their student and do not necessarily have to jump at the first credit card opportunity they see. Currently, interest rates on student credit cards are reportedly around 13% to 20%, but since parents will have to vouch for a student who is under 21, a parent’s financial position will obviously impact the rate a student receives on their card. Yet, parents need to ask why they are pursuing a student credit card or why their child may be wanting one of these credit cards, as the reasons behind a credit card will ultimately shape what opportunities a parent may want to research to get the most optimal card for their needs.

As an example, students who may simply want to have a line of credit in case of an emergency could potentially use a secured credit card as well as a traditional unsecured student credit card, but some students who may be nearing graduation may want a card to begin the process of improving their credit score. Yet, if the student simply need extra money throughout the semester, parents may want a credit card with a low limit, might want to use a prepaid credit card, or potentially could open a checking account linked with a debit card that could be used by their student.

Obviously though, no matter what option a parent and student decides will be best for their situation, it needs to be understood that using a credit card in college can be both helpful for a student but also could be detrimental as well. Students who practice smart financial habits, don’t carry a balance on their credit card charges, and essentially only use their card when they can affordably make purchases or after budgeting so that they can fully pay off these charges are those who will likely have few problems that arise.

Yet, if a parent or student is not cautious with these credit cards, situations have arisen in the past where students simply spend beyond their means to repay, allow balances to be carried over, and end up paying more when interest is factored in or may run the risk of defaulting if their parent cannot help them pay off their debt. While there are various ways to give students access to funding, credit cards can be helpful in aiding a student when building a credit history or paying for certain costs like books, but parents may be in a better position where they opt for student credit cards if balances will not be carried and payments can be made in full on a student’s charges. Obviously though, the decision to acquire a student credit card is the personal choice of any parent and college students who may qualify, but advisers do still caution against problems related to misuse of these cards as it could create financial difficulties early in the life of any student and could set them back in their personal financial life even before they have graduated college.