The increasing cases of bad debt among young credit cardholders are indeed an alarming trend. This is why some parents dismiss the idea of letting their kids get a credit card while in high school or college.
But are college credit cards to blame for the growing number of bad credit and bankruptcy victims? Are credit cards for students really a threat to the economy.
Are Credit Cards for Students Threatening the Economy?
Getting a credit card while in college is recommended to help young people build early credit. However, some students get a credit card for the purpose of using it to finance their college education.
Nevertheless, student credit cards are meant to provide short term financial support. A college credit card can come in handy when unexpected expenses arise. But along its advantages, there are also risks involved that young people needs to be aware of.
Credit cardholders must use their cards only for important purchases. More importantly, it is crucial to pay off balances in full each month to avoid the interest rates and the risk of debt build-up.
Unfortunately, a lot of cardholders are guilty of not submitting payments on time. Many cardholders choose to carry over their charges from month to month rather than pay off the entire balance. Obviously, such a habit puts anyone at a greater risk of bad credit. Whether you are a student or an adult, if you are not consistent with your credit card payments, you could be in big trouble.
Why Teens Need Credit Card for Students
Student credit cards are great tools for establishing credit history. Lenders, insurers, landlords and employers all use credit reports to check an individual’s background and credit worthiness.
Credit card companies also require good to excellent credit. Those who enjoy an outstanding credit rating are given the best interest rates, higher limit and better privileges.
Clearly, every student who owns a credit card needs to be smart about handling it. Bear in mind that when used correctly, it can work to your advantage. On the other hand, when used carelessly, it can lead to a serious bad credit situation.
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