Since student credit cards are an issue across the country, we’re taking you back to school for some extra-credit advice on the best ways for college students to use plastic and the biggest mistakes to avoid. Wallethub.com posed the following questions to a panel of experts, and you can check out the responses of Dr. James Philpot, Associate Professor in the Department of Finance and General Business and Director of the Financial Planning Program here at Missouri State University, below.
What attributes would you say the best student credit cards share? Generally, the best attribute common to student credit cards is the ease of applying and obtaining one. Card companies know that students have already paid (or arranged payment) for a large purchase item that recurs over a few years. This translates into a reasonable credit risk for the card issuers.
What is the best way for a college student to use a credit card? The best use of a card by college students is for purchasing gasoline only with the card, and then paying off in full with each bill. Benefits include limited spending, no finance charges, and developing a regular habit of paying in full each month. Also, card issuers and other potential creditors will see this use as a very positive sign, increasing future creditworthiness.
What is the biggest mistake that college students make with credit cards? Overspending. Cards make purchasing easier, and students can lose track of spending.
What is your best piece of advice for a college student who is considering applying for a credit card? Watch your spending very carefully.
Should credit cards be easier or harder for college students to get (or is it just right)? Unlike many of my academic colleagues, I don’t view the credit card issuers as “preying” on college students, given that they make all the disclosures required by the Truth in Lending Act. The problem is that we have supposed and official “adults” who will sign contracts without reading or understanding them, and who have little personal spending control.
(reprinted from https://wallethub.com/best-credit-cards-for-college-students/#james-philpot)