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Advantages & Disadvantages on College Students With Credit Cards

by Van Thompson

Although the 2009 Credit Card Accountability and Responsibility and Disclosure Act limited the ability of credit card companies to target college students, college students frequently receive credit card offers and enticing incentives. A credit card can help to build your credit and establish a healthy financial future, but it can also land you in serious financial trouble, particularly if you're unfamiliar with how credit and debt work.

Emergency Funds

The demands of challenging classes, extracurricular activities and making new friends can make it difficult for college students to work full-time jobs. Many students attend college far away from home, which means they may be unable to rely on their parents to help them in an emergency. A credit card can be a source of emergency money when you get a flat tire, have an unexpected bill or need to buy an expensive textbook. If you regularly pay off the balance -- rather than steadily increasing your debt -- your card can help you cover your basic needs during college.

Building Credit

Good credit can be the ticket to a brighter financial future, and a credit card helps you build a credit history. People with no credit often struggle to get loans, mortgages or cars and may even have trouble leasing an apartment or getting insurance. If you keep your debt low, a credit card can be your first step toward building the credit score you'll need to achieve your financial goals.

Increased Debt

According to a 2009 Sallie Mae study, the average college student graduates with more than $4,000 of credit card debt. New graduates sometimes struggle to get jobs, particularly high-paying ones, and this high debt load can make starting out much more difficult. Particularly if you carry a balance from month to month, interest charges on your card can cause your debt to quickly skyrocket.

Financial Ignorance

Credit card companies sometimes target college students because of their financial ignorance. Young people who have no experience with making a budget or managing debt may be unaware of how quickly a small credit card charge can snowball into a large balance. Interest, annual fees, late penalties and similar charges can quickly add up. Even students who understand the risks of credit cards may not be able to adequately plan for financial setbacks and may struggle to make an accurate budget. Students who aren't fully aware of how credit cards work or who aren't able to regularly make a budget can end up in serious financial trouble if they get a credit card.

About the Author

Van Thompson is an attorney and writer. A former martial arts instructor, he holds bachelor's degrees in music and computer science from Westchester University, and a juris doctor from Georgia State University. He is the recipient of numerous writing awards, including a 2009 CALI Legal Writing Award.

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