Credit cards are no longer just for Mom and Dad. A credit card for a student should be seen as much more than just a convenient way to pay for expenses. A credit card is a crucial instrument for succeeding in today’s society. In addition to cash back and other rewards, these cards can be a useful tool for a student’s long-term success. Students should consider acquiring a credit card for these 6 reasons.
1. Receive Cash Back and Other Rewards
The vast majority of credit cards allow their users to earn rewards in the form of points or cash back. Depending on the credit card, some offer 1% cash back for all purchases while others offer 2-5% cash back for specific purchases, such as gas stations and restaurants. Over the course of eight years in high school and college, these single-digit percentages can add up quickly.
2. Build a Credit History
Responsible use of a credit card over many years will help build a strong credit history. Using credit responsibly includes keeping a low balance, paying bills on time and in full, and not taking on too many credit cards at once. Those with a strong credit score can apply for higher limit credit cards, cards with better benefits, and increase their chances of getting a good loan on a house, car, or business later in life.
3. Renting a House or Apartment
It is unlikely that students in college will be considering buying their first house because many lack the capital and credit in order to do so. However, landlords usually require credit when reviewing rental applications to determine if they would make a good tenant. Without a credit history, college students might have to live at home or in a less desirable location. It is important to establish a credit card as early as possible in order to assist in the rental process.
4. In Case of Emergencies
Many college students don’t have the cash on hand needed to deal with emergencies. In an emergency situation, buying things on credit could be the only option. Paying for things on a credit card that the person does not have money for should be a very rare thing, but it is nice to have the option in dire circumstances. In a life or death scenario, it is better to worry about the financial implications later. When possible, it is important to pay off credit cards every month, or students will deal with the large interest charges and could start to get buried in credit card debt.
Carrying substantial amounts of cash around can be a pain. The hassle of counting out change or carrying a jingly metal horde around in your purse or pockets is exhausting. It is also much easier to lose over time. Paying with a credit card is a quick transaction that does not have the risk of the cashier handing out incorrect change or misreading the dollar bill that was given to them.
Having large amounts of cash on hand can be dangerous. A person who carries significant amounts of cash is a target for criminals. When cash is stolen it has little chance of recovery. Stealing a credit card and using it for any extended period of time is much riskier because all of the transactions are tracked. Additionally, the second a credit card user realizes their card has been stolen, they can cancel it and receive a new one in the mail in just a few days.