Should college students have credit cards? The pros and cons

There are several reasons a credit card can be beneficial in college. For instance, responsible credit card use can help you budget and start building credit. But that doesn’t necessarily mean a student credit card is right for everyone. 

Here are some pros and cons to think through as you consider whether a credit card is the best choice for you or your college student.

What you’ll learn:

• With responsible use, credit cards can help college students build a positive credit history, be prepared for an emergency and learn how to manage their finances—while potentially earning rewards.

• To use credit responsibly and avoid risks, it helps for students to understand things like card terms and conditions, interest rates and potential fees.

• A student might be able to access credit with a student credit card or secured card, or by becoming an authorized user on the credit card account of a trusted family member or friend.

Here are five ways having a credit card can help college students, if the card is used responsibly:

When your credit card issuer reports your payments to the credit bureaus, that information will appear on your credit reports. This record of how you’ve managed debt is known as your credit history. Companies may use this information to decide whether to offer you a car loan, an apartment, a mortgage and sometimes even a job. 

Building a credit history in college means you won’t be starting from scratch when you graduate. And establishing a solid history of on-time payments can help you start out strong.

What if your car breaks down or you need to upgrade your laptop or cellphone? As a young adult, you might not have an emergency fund yet. In that case, a credit card could serve as a safety net to help you deal with an unexpected cost. The Consumer Financial Protection Bureau (CFPB) notes that you should be clear with yourself about what represents an emergency.

Having a credit card can help you build healthy financial habits by doing things like budgeting, tracking your expenses and making on-time monthly payments. Whether you’re handling an emergency expense or managing day-to-day spending, having a plan to pay off your credit card is valuable.

Cash back credit cards can help you get the most out of your spending on everyday needs like textbooks, food, gas and rent by earning cash back on your purchases. And when you’re a student, every little bit helps. It may be worth checking out other kinds of rewards credit cards if you’re interested in different benefits.

If your cash is stolen, there might not be much you can do about it. But if you report fraudulent charges on your credit card and they’re investigated and verified, many card issuers—including Capital One—won’t hold you responsible for the charges. And if you’re a Capital One customer, your credit card has a number of security features that may help you detect fraud.

There are lots of good reasons to have a credit card in college. But everyone’s situation is different, and understanding how credit cards work and using them responsibly are important. Here are a few potential disadvantages to be aware of:

Having a credit card could tempt you to overspend. And overspending can be costly if interest accrues or fees apply to your transactions. If your card has a high credit limit, overspending could also lead to long-term debt that’s difficult to pay off in the future. Having a solid understanding of your credit card’s terms and conditions and how it works can help you limit or avoid interest charges, fees and long-term debt.

Making late payments may result in late fees and negatively affect payment history records in your credit reports. And that negative information could hurt your credit scores. Late or missed payments could result in derogatory marks on your credit reports that can last for up to seven years.

If you’ve weighed the pros and cons and decided to go for it, you can start looking for the best student credit card for you. If used responsibly, these credit card options could be a good entry point into the world of credit and set you up to be eligible for other cards and loans in the future:

Student credit cards aren’t that different from other credit cards, but they can be more accessible to students with no credit history. That’s because student cards tend to be easier to get approved for than other credit cards—but that means they may have lower credit limits.

With a secured credit card, you deposit an amount of money—sometimes known as a security deposit—that the card issuer holds as collateral for the credit line. For example, the Capital One Platinum Secured card has refundable security deposits of $49, $99 or $200 for an initial credit line of at least $200. Deposit more, and you could raise your credit line as high as $1,000. You can then use the card to make purchases just like you would with other credit cards.

Becoming an authorized user means you’ll get a card linked to a trusted family member’s or friend’s account. While you’ll likely get your own card and can make purchases, the primary cardholder is ultimately responsible for all the charges made on the account. But negative actions like making late payments could affect both of your credit scores.

Getting a credit card in college is an exciting milestone. And if it’s used responsibly, it can be a great way to jump-start your financial future. But before you get a credit card as a college student, consider your financial situation and whether you will be able to use it responsibly. 

If you’re looking for a way to build credit and earn rewards while you’re in college, using a student credit card responsibly may be a good option.

• See whether you’re pre-approved for a student credit card without harming your credit scores.

• Explore Capital One student rewards credit cards you can use to build credit with responsible use.

• Earn unlimited cash back on food and fun with the Capital One Savor Student card. 

• Earn unlimited 1.5% cash back on every purchase, every day, with the Capital One Quicksilver Student card.