Pros and cons of having a credit card in college

With a new school year rolling around, parents and their college-age kids are deciding if it's best for the students to have a credit card. It's typically not an easy decision, especially considering how many say credit cards contributed to their financial hardship. When not handled the right way, they can be dangerous, but they can also be beneficial when handled correctly. If you're entering college and considering getting a credit card, there are several pros and cons to be aware of before you sign on the dotted line.

Pro: Helps build credit

Having good credit is incredibly important in life. It has an effect on many decisions you'll make in the future including buying a car, renting an apartment and buying a home. A good credit history can prove to those looking into your financial history that you're financially responsible and not a risk. The best way to build up a good credit using a credit card is to pay off your balance each month and make payments on time.

Con: Can destroy credit

The same way good credit has a positive effect on what you buy or rent, bad credit can have a negative affect and prevent you from getting what you want in the future. Even one missed payment or high balance can be a blemish on your financial history.

Pro: Beneficial to use in an emergency

Should you need instant money to pay for something important, such as car repairs if your car breaks down or college textbooks, you can use your credit card to make immediate payments. It's also a great way to not have to ask your parents for money in an emergency.

Con: Provides an easy way to overspend

One of the major reasons so many get in trouble with credit cards is because it's so easy to use them to overspend. One extra shirt here or a drinking night out there - all paid for on the credit card - can make it easy to quickly rack up a big balance. One easy way to prevent overspending is to never take your credit card out with you. Another way is to make sure you avoid online shopping and don't save your credit card data on retail sites.

Pro: Can encourage healthy spending habits

Having a credit card can encourage good spending habits. It can teach you about paying bills on time, paying off your balance and not racking up more charges than you can pay off. The positive money lessons you learn can last with you through the rest of your life.

Con: Can build up numerous extra charges

Many, especially teens, forget that the money they spend on the credit card isn't all there is to it, which can lead to problems when trying to pay off the balance. For example, there's interest charges, late charges, over limit fees and a possible annual fee. Depending on the credit card, the late charge alone can be around $35.00. If you have to use the credit card, it's vital to be very careful how you handle it so you don't rack up extra fees.

It's not necessarily bad to have a credit card in college. It's all about how carefully you handle it and how well you manage the bills. Before you commit to having the card, review all the paperwork right down to the tiny fine print. Compare interest rates, rewards and annual fees to ensure you're getting the best card for you.

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