For most, going to college offers the first taste of financial freedom and the opportunity to spend your money however you want. It’s also the period when most people get their first credit score and finally become eligible for financial products, including credit cards.
Increasing your spending power with a new credit card may be an exciting prospect. Still, it’s crucial to ensure you have a good handle on your finances and that you’re fully aware of all the pros and cons of opening a credit card account while in college.
Pros of Getting a Credit Card in College
1. Wide Selection of Student Credit Cards on the Market
Credit card companies have created several excellent credit cards designed exclusively for students. This makes getting approved for a credit card as a student relatively easy. Many of these credit cards don’t even require you to have a credit score.
As a college student, you’ll want a card with good rewards, a cashback program, and a reasonable annual percentage rate (APR). Just make sure to read the terms and conditions of a card carefully before applying for it, as some student cards may take advantage of their financially inexperienced target demographic.
2. Opportunity to Build Credit
In the United States, having a good credit score as an adult is essential. Any time you want to make a large purchase, good credit will open the door to low-interest rates and exclusive credit offers from lenders competing for your business.
Contrary to popular belief, you don’t automatically get your first credit score when you turn 18. You have to meet specific credit-scoring criteria, which you can do by opening your own credit account or becoming an authorized user on someone else’s credit card.
Getting a credit card is an easy way to become scorable and start building up good credit without taking on massive amounts of debt.
What’s more, the younger you start, the better. Your credit score increases the longer you’ve been using credit, so opening a credit card account while you’re still in college is the perfect way to start establishing a long and rich credit history.
3. Perfect for Study Abroad Trips
Many credit cards don’t have foreign transaction fees, making them ideal for overseas travel. A credit card could help you save hundreds of dollars in foreign transaction fees if you plan to take a study-abroad trip.
Most banking can also be done through your phone, so you’ll be able to pay off any charges while traveling. Just make sure you notify your bank that you’re traveling ahead of time to prevent your card from being frozen.
4. Good Discounts for Students on a Budget
Many credit cards come with rewards and discounts on select purchases. If you love to eat out, a card that earns you cash back on dining would be a great choice. If you’re a big roadtripper, a card that rewards you for purchases on gas and other forms of transit could be helpful.
Many credit cards also include benefits like exclusive early access to concert tickets or discounts at affiliated stores and businesses. The trick is to find a card with benefits you’re likely to take advantage of.
Cons of Getting a Credit Card in College
1. Lots of Responsibility
Credit cards can help your credit score but can also hurt it if misused. People tend to spend more when using a credit card than when using a debit card or cash.
When you’re new to handling your finances, it’s imperative to remember to never spend money you don’t already have.
Credit card money is still “real” money, and the consequences of not being able to pay off credit card debt are even more real. We recommend paying off your full credit card balance every month before your payment due date. That way, you’ll never miss a payment or allow late fees or interest to pile up.
If you think you might struggle to keep up with your payments, you may want to wait a year or two before getting your first credit card.
2. High-interest Rates
Credit cards tend to have higher interest rates than other forms of credit, like loans. If you haven’t had a chance to establish a good credit history yet, you’ll probably end up with particularly high-interest rates on any credit cards you get.
A high APR makes paying off credit card charges on time even more critical. Interest only accumulates on your unpaid balance, which means you can avoid paying any interest by paying off your balance in full each month.
Interest can add up quickly, even if you don’t leave much unpaid. Credit card debt is notorious for growing exponentially, which is how many people end up deep in debt. You’ll have to be careful to avoid losing control of your spending while in college to protect your finances.
3. Risk of Falling into Debt
Having a credit card can make it tempting to spend beyond your means, and those purchases add up. A coffee, a dinner, and a couple of required textbooks could easily leave you with hundreds of dollars to pay off.
But debt does more than hurt your wallet. It can make getting approved for a mortgage, an auto loan, or even certain types of insurance incredibly difficult. The last thing you want is purchases and other financial decisions you made as a college student to follow you for the next 20 years.
The Bottom Line
Getting a credit card as a college student is exciting. It’s a new opportunity to experience life as an adult, build credit, and take advantage of credit card perks and rewards. But much like many other adult experiences, it comes with a tremendous amount of responsibility—and it’s okay if you aren’t feeling up to that yet.
Yasmina Achlim is a frequent contributor to FinanceJar. Her writing covers credit cards, credit scores, and debt collection. She also has experience writing about culture and the environment. Yasmina has a Bachelor’s in Film and Screen Media.