Students and credit cards

Credit cards should be considered practice.



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How does a student—someone without a job, with no credit history and no assets—get a credit card? Let’s face it, if you walked into a bank and told the manager you weren’t working but you were good for a loan, he’d laugh his head off. So why do students who are already carrying enough student debt to choke a horse qualify for revolving credit?

Lenders know that they can win a young future-professional client by issuing that elusive first credit card. After all, that credit card is a terrific way for a future responsible member of society to establish a credit history.

Used for this purpose, credit cards do have a place in a student’s life. Unfortunately, the mere granting and successful use of the first card signals the other lenders to pummel a student with more temptation to spend. And when all is said and done, students end up with debt they have no hope of ever paying off.

While banks may be to blame for their role in issuing credit cards irresponsibly, they aren’t to blame for our children’s inability to manage credit effectively. That’s our fault as parents. Since one-in-two of us carry a balance on our cards, it’s clear we haven’t figured it out ourselves. And we’re loath to accept our role in teaching our children when and how to use credit.

Perhaps the biggest “Aww com’on!” I hear from parents is when I suggest that if they lend their children money that they charge interest. Hundreds of parents have told me that they can’t do that. It’s immoral. It’s reprehensible. My response: Grow up! Baring religious restriction, your children are going to eventually have to figure out how the world of credit works. Would you rather a stranger did the teaching?

Students’ use of a credit card should be considered practice. No student without an income should have more than one credit card. And credit limits should be low—a limit of $250 to $500 is sufficient—so good repayment practices develop. More than that and credit issuers aren’t trying to teach our kids how to use credit responsibly. They’re tempting them to spend their future incomes before they’ve even begun to earn a living.

You can’t count on lenders not to lure your young adults onto the path to debt hell. You’ve got to accept that it’s your job to teach them about credit, how it works and the pitfalls. Ignoring the problem hasn’t made it go away.

4 comments on “Students and credit cards

  1. You are being far too general and this is a pretty bad stereotype.


  2. I actually don't think anyone should get a credit card if they're not working, especially students who most often have no clue how credit works. The responsibility of credit should only be given once the student is responsible enough to pay it back.

    I do agree that credit should be taught at home and not by a stranger. More focus should be on teaching kids how to buy things only when they have the money, rather than relying on credit. Many students pay their way through school by working their butt off!


    • I think you are right – Banks are so quick to lend money and in my son"s case, because he did not have a good credit rating gave him a card at a higher interest rate. Guess what, now he owes the max at some crazy rate and I get so many calls every day (that I don't answer) from their collection dept. it drives me crazy.
      I believe banks are immoral – they keep making tons of money and don't care who they are hurting.


  3. This…doesn’t actually address the question posed in the title.

    I’m a student who is not working this term by choice, due to starting a demanding course.

    I own a car and pay insurance. I have paid and do pay rent (always on time). I have held more jobs than can fit on my resume and remained a good employee to the end, only leaving because I work seasonally. I have a bachelor’s degree.

    And I can’t even get the most achievable of cards.

    I was actually kinda hoping this article would be enlightening.


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