By Bryan Pietsch
In the age of Venmo and splitting bills down to the penny, why shouldn’t college students be taking advantage of the perks of having a credit card? Students are penny-pinchers–they’ll split a $10 Uber ride between five people and Venmo each other the difference. They’re suckers for deals, sales and free shirts. So why not get free money?
Credit cards (and credit card debt) seem like a popular choice in America, but a study by Student Monitor found that only 6 percent of total student spending was on their own credit cards. Parents’ cards, debit cards and cash reigned supreme.
Yes, it can be scary–APRs, a monthly bill, and the ability to spend thousands of dollars more than you actually have in your bank account. But with signup bonuses into the hundreds of dollars and cash-back points effectively giving a discount on each purchase, using a credit card correctly can save cash-strapped students a lot of money.
For example, I’ve been able to take 3 round-trip flights from the signup bonus on one of my new credit cards. On another card, I got a $625 bonus for spending a few thousand dollars in the first few months of owning the card, which is simple when you consider how easy it is to spend money on books, flights, utilities, food, gas and transportation.
And I routinely get $20 to $40 a month back in cash back because of the great dining and travel rewards on another one of my cards. The best part of all this free money? Because I’ve managed my spending, I’ve been able to pay back my statement in full every month and not have to pay interest.
Getting a credit card also helps students with something they’ll need down the road–a credit score. Imagine you’re a fresh college graduate heading into your first big job. You’ve got a big salary, now you need the apartment and car to go along with your new, post-grad life. Except because you never had a credit card and didn’t take out any loans, you never had a credit score… so leasing that apartment and that shiny new car might be a little more difficult.
For students with no credit score, it’s not hopeless. Many banks and credit card companies offer cards aimed toward college students. In exchange for accepting the application of a young person with no credit history and a presumably low salary, they give out smaller rewards and higher interest rates. But after using the first card responsibly, it’s easy to get a new, better card with the newly-built credit score.
It’s necessary to note that credit cards are not without their risks. A student in a bind might use a credit card to buy something they don’t have the money for–whether that’s an expensive dinner, new clothes or a weekend trip. It’s easy to spend money when you’re looking at a huge credit limit compared to a checking account of finite money.
For students using their parents’ credit cards or simply a debit card, getting a credit card can seem like a scary and unnecessary hassle. But if used right, that shiny piece of plastic can save a savvy student some much-needed cash.
Bryan Putsch is a student at Arizona State University.