Every year millions of people find themselves in credit card debt. Though credit card debt may be financially devastating, credit influences most aspects of people’s lives. Unless you have a lot of money in the bank, you need a good credit score to buy a house.
College Students and Credit Scores
College students are among the individuals experiencing difficulties when trying to have a good credit score. Matter of fact, the Credit Card Accountability Responsibility, and Disclosure (CARD) Act of 2009 came into law as a result of the increasing credit card debts in college students. The act states that students under 21 without a demonstrated means of repayment or a cosigner shouldn’t get a credit card. The policy also stresses the need to increase their credit limit with cosigner authorization.
Credit card companies understand that young adults are more eager to start their lives as adults when they enroll in college. Furthermore, most college campuses have credit card vendors and banks that give students free gifts for signing up for credit cards. For many students, this may be the first credit card they encounter. They’re unlikely to pay attention to the card features, interest rates and terms hence setting themselves up for failure.
Do Students Deserve Credit Cards?
Despite the negative consequences of credit card debt, students need a credit card to establish a credit history. The sooner they establish a line of credit, the longer their credit history will be when it comes time for them to take out a serious loan. Credit cards are great for emergencies, which occur irrespective of one’s current financial status.
Many students don’t have cash at the bank set aside for emergencies. Credit cards give them the ability to come up with money to solve whichever problem they’re facing. Their parents won’t have to worry about them getting stranded if they need to fly home for an emergency or if their car breaks down.