Credit Cards for College Kids

A Credit Article Contributed by Nithya K

Do College Kids Need Credit Cards?

Despite debt dangers and other pitfalls, many feel that college kids do need a credit card when handled carefully. With all the stories about students and the perils of credit card debt, it is very easy to forget the benefits of signing up for a credit card as a college student, namely establishing credit.

High Grades, but No Credit Card?

Making the giant leap from college to the real world is really tough without a credit history. There is a possibility of getting turned down for an apartment when a potential landlord checks up your credit history and finds nothing there. Or you might be asked to shell out an enormous deposit before moving in.

Some very simple activities like turning on the lights in your new place might take a chunk of your money bundle. Since you don't have a credit card, many utility companies would require you to deposit $100 before powering up your apartment. And you won't get your $100 for a whole year! Without a credit history you end up like a great unknown. Your lack of a payment record makes you a great big blank and a risk. The credit reporting bureaus say that the people who do not have a credit history have to consider you a high risk as they do not have any paper to make their decision on.

Anytime somebody checks your credit, you end up paying a little more. Insurance companies check, so you will end up paying more for car insurance. If you are planning to buy your first car, be prepared for very high interest rates. Even getting a credit card at this point would be more difficult. All those credit card offers you trashed away in the bin would be much harder to come by in the real world.

Even if you get a pre-approved credit card offer, there is a high probability that you would be turned down. Reason - the lack of a revolving credit account on your credit report. You might not even get a credit card from your bank. They will also take your deposits and give you checks, but they wont give you a credit card.

Credit Cards - Catch 22 Situation

You would know by now that in such an event you are caught between nowhere. You can't build up a credit history without a credit card and it is really tough to get a credit card without a credit history. In college you don't have to worry about this as quite frankly card issuers weren't worried about you not paying. They knew your parents would most likely step in if you ran up oversized balances or fell behind on payments.

But once you graduate, you and your lack of credit history are on your own. You might end up with a department store card but it won't help you much. And also some issuers of department stores do not report to the credit bureaus too. This means any on-time payments you make with the card won't be noted on your credit report.