As students go off to college, many receive their first credit card and are faced with the challenge of learning how to manage their own money. If anything is to be said about this, responsibility is a must, especially if it comes in the form of a little plastic card.
For a college student, receiving a credit card can be glorious. It gives you the option to spend money, without cold hard cash in your hand. Although this is true, the word ‘credit card’ means more than just a piece of plastic.
“Credit is a situation where one person or one organization loans money to somebody else,” said Kathy Sweedler, a consumer economics
educator through the U. Illinois Extension Office.
Kevin Waspi, UI lecturer in finance, defines it more simply as “the ability to have access to other people’s money.”
Using borrowed money can be dangerous, especially for students that are just jumping into the pool of financial responsibility, but obtaining a credit card is a good learning experience.
“(A credit card) gives you an opportunity to practice using credit,” Sweedler said. “Remembering to pay your bill, making decisions about when you want to use your credit card and when you don’t want to use it, those are all things that take practice.”
Ryan Maes and Mike Ferak, seniors in Business and peer educators in the Financial Wellness Center, both agree that college students should have credit cards.
“Building credit is extremely important in college because you’re building a credit history and credit report,” Maes said.
With a better credit score, students will have more opportunities to make bigger purchases in the future, such as a car or a house. Ferak says that not having credit will make it difficult to make large purchases.
Besides considering future purchases, those thinking about becoming credit card holders should also be aware that some people have a harder time managing their money than others depending on their spending habits.
Waspi and Ferak agree that getting a credit card does not mean that a last-minute person will become instantly responsible — and in the credit world, this translates to one thing: late fees.
“It’s true that you can buy things that you don’t have cash for right then and that can be a problem for some people,” Sweedler said. “If you’re getting a new credit card, this is something to be aware of. Think, ‘how will I pay this when the bill comes?’”
Despite the setbacks, a credit card can help when people are in a financial hurtle.
“In the event of an emergency, you have money as needed,” Maes said.
Emergency or not, the decisions you make about how you spend now are the ultimate testament to your ability to build up good credit in the future.
Understanding financial responsibility in college can help you make the most out of that powerful piece of plastic, wherever your future endeavors take you.