It seems like the credit card is a ubiquitous symbol of freedom to teenagers, allowing them to spend their (or their parents’) money on whatever they want, from late night snacks at the local mini mart to a night out at the local bar. With it comes great responsibility, and many college students aren't ready for the often unseen pressures of maintaining a credit card. Here are some of the reasons to delay getting a credit card in college:
Overspending
Credit cards can magnify bad spending habits and put students in significant financial risk. According to the 2008 paper Monopoly money: The effect of payment coupling and form on spending behavior, researchers determined that using credit cards instead of cash to pay for purchases encourages people to overspend by mitigating the "pain of paying" and increasing the psychological gap between the consumer and their money. Although students may not realize it at first, the extra charges on their card will add up and over time they may not be able to afford their spending habits. Missing the payments will incur interest, which will shorten an already tight budget.
Compounding debt
Being in college, one of the most important financial obligations students have to worry about is student loan debt, which grew to $1.4 trillion across the United States in 2017. Students who take on student loans will owe on average $28,400 when they graduate college. Burdening oneself with credit card debt on top of student loans incurs the kind of financial risk that can be detrimental for the future, especially if you can barely make payments on existing debt.
Not enough income
Already burdened with schoolwork, students can be hard pressed to find the time to maintain a steady job and fit it within their busy schedules. Between 2005 and 2015, percentage of full-time undergraduate students who were employed fell from 50 percent to 43 percent and the percentage of part-time undergraduate students employed fell from 86 percent to 78 percent in the same period. Not having a steady income makes it hard to budget your spending accordingly, and with the ease of overspending on credit cards can lead to debt that can damage your financial success for the future.
Damages credit
If you constantly overspend and miss credit card payments, your credit score could be affected. Having a sub par credit score can decrease your chances of obtaining a mortgage on a home or securing an auto loan for a car, and can put you in serious financial jeopardy for the future. You will most likely have to pay higher interest rates on credit you obtain, which can spiral into debt if not managed carefully. While you will eventually have a credit card, skipping out on it early on can keep you clear of credit issues.
Realizing the responsibilities of owning a credit is a great first step in understanding financial success. In college, when students have limited time to think about anything other than school, it might be hard to take the time to consider cutting the credit card, but it is well worth it.
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