July 19, 2021Should You Have a Credit Card in College?  

Graduating from high school to college is a big milestone in a teen’s life and brings many changes. Since some of these changes are linked to finances, teenagers and their parents often wonder if having a credit card while they are in college is a good idea. Here are some pros and cons of credit card use during college, and some tips to avoid overspending.  

The Upsides of Credit Cards 

Despite their potential drawbacks, credit cards can also have significant upsides for college students. While the following benefits can be true for anyone, they can be especially useful for students who often have limited financial resources and short credit histories. With a credit card, students can: 

• Pay for emergency items, like car repairs 
• Purchase school materials, like books, lab supplies, etc. 
• Build their credit history and score 

A student’s credit history and score will affect their financial future, like their ability to rent an apartment, lease or finance a car, or take out other loans in the future. Plus, they determine the rate that they will pay on those loans. Employers may even check a student’s credit score before making a hiring decision.  

The Ways to Obtain Credit Cards Responsibly 

Given the downsides and upsides, getting a credit card during college must be approached with thoughtful consideration. College students can mitigate potential downsides by doing the following when they open a new card: 

• Select a low-interest card, since interest payments outweigh any potential rewards 
• Go to a trusted institution, like PEFCU (we’re a not-for-profit co-operative) 
• Request a lower credit limit, potentially as little as a few hundred dollars 

Additionally, students and parents who are especially concerned can opt for a PEFCU Visa® Secured Credit Card. With this type of card, the cardholder pays a sum upfront for security (for example, $500) to be held by PEFCU. This amount is the limit for the Visa® card and will be used to repay the balance if the cardholder is unable to make payments. The arrangement allows college students to build their credit history while keeping their credit card balance low and manageable. 

The Downsides of Credit Cards 

Clearly, there can be downsides to credit cards for people of all ages. They require fiscal maturity to be used wisely. Everybody knows somebody who ran into financial trouble from using credit cards recklessly. People who are not wise with credit cards can succumb to one or more of these pitfalls: 

• Uncontrollable spending 
• Charges and high-interest rates that increase their debt 
• Overwhelmingly high balances won’t seem to shrink 

While being flooded with credit card debt can happen to anyone, college students may be particularly susceptible to these dangers because they do not have the same maturity and experience as older adults. 

Of course, a credit card also gives college students more autonomy over their spending. While this may not be a drawback for all, buying without parental approval is much easier. For example, expensive computers, phones, televisions, or vacations can easily be paid for by a credit card, but may not be parent-approved. Parents, want a way to prevent this? Download the PEFCU Cards app to have notifications sent to you if your student makes a purchase over the dollar amount you set on PEFCU Visa® debit or credit card.  

We’re Here to Help! 

Having a credit card in college can give both parents and students peace of mind. However, it’s a decision that requires careful thought and consideration.  

To discuss options and learn more about our credit card programs, stop by any branch or give us a call at 1-800-266-6673.  

Each individual’s financial situation is unique, and readers are encouraged to contact PEFCU when seeking financial advice on the products and services discussed. This article is for educational purposes only; It does not constitute legal advice. If such advice or a legal opinion is required, please consult with competent local counsel.