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Students and Their First Credit Card – the Responsibilities That Come with a Piece of Plastic

BY Caitlyn Ng

Updated 13 Nov 2019

Do you remember in the not-so- distant past, students used to get a weekly or monthly allowance from their parents for their daily expenditures? The days of having to wheedle your parents for more pocket money are now slowly being replaced with students keeping their own credit card.

What's covered in this article?

While we can’t say whether this is a good or bad idea (it really depends on the individual – working adults are also more than capable of spending impulsively), what we’re going to do is take a look at how students can own their first credit card responsibly.

That rectangle piece of plastic is able to help a student build up a good credit rating for future purposes, in addition to educating him / her about budgeting successfully.

If you are reading this Loanstreet article, we will safely assume that you know the what and how of credit cards. If you’re still at a loss as to which of your parent’s cards you’d like to be added on to, here’s a quick but comprehensive guide on the types of credits cards on the market.

1) Make sure to have a rough budget

This goes without saying too much (also known as common sense). Entering a retail outlet or a grocery store without a rough estimation of how much is allocated for spending is a surefire way to end up with an exorbitant bill.

Impressionable students holding onto that brand new piece of plastic might suddenly be tempted to go on a shopping spree; those imported foodstuff or latest branded goods aren’t so far out of reach anymore!

Prepare a list of what to buy, and stick to it (as much as you can). That way, your eyes will be less likely to wander and check out other stuff on display.

2) Use mainly for small, occasional purchases

The key to keeping a credit card responsibly is to practice moderation. If you leave it sitting in your wallet / purse for a long period of time without any usage, the issuing bank may just close the account due to inactivity. Splurging constantly and you’ll have angry parents to answer to.

So what is a college / university kid to do? You can consider putting recurring charges onto that supplementary card (like your postpaid phone plan, Netflix account and gym membership for example) so that you won’t have any trouble with the repayments at the end of the month.

3) Avoid extravagant buys, unless for an emergency

You’re debating whether to buy that watch with a four-figure price-tag, and decide to get it as a present for yourself. That shiny new purchase has just caused you to exceed your credit limit, which wouldn’t be a problem if no emergency situation abruptly crops up.

However, what if your car tyre suddenly bursts while you’re on the way home, leaving you stranded in the middle of the highway? Keeping your debt levels low will ensure that you have ample credit left to easily access for necessary repairs and replacement parts.

4) Pay off your balance each month

Let’s recap for a bit here: credit cards are a useful tool for helping students to build up good credit at a young age. So when you are first starting out on that, how do you ensure that your record is squeaky clean?

It’s best not to carry a balance on the card, by using it for purchases that you can afford and are only necessary, so that you can pay the amount in full at the end of the month. What if you find yourself unable to pay off the balance? Then you are living beyond your means and really shouldn’t be buying all that in the first place!

An individual should only have a credit card if he / she has a form of income to fund this financial tool. To own a credit card and carry a balance is to owe the bank in the form of interest fees. Why should a student be paying interest fees if he / she is not able to afford it?

To conclude

There are plenty of other tips and tricks as to how a student can wisely maintain a credit card during college / university years. Sticking to just one credit card is one of the most ideal situations since it allows time for a good credit score to be maintained.

It all boils down to one simple characteristic though: responsibility. Knowing when to resist the temptation to go wild and swipe for every single purchase is important so that the student would be able to benefit from building up good credit at a young age.

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About the Author

Caitlyn Ng


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