Newswise — As fall approaches, families nationwide are preparing to send their children off to college, some for the first time. Video games, mini fridges and televisions are on most students' shopping lists, as parents browse for bed sheets, alarm clocks, and textbooks. But one of the smallest items that you may pack could be the most useful —or harmful— to your college student.
Credit cards are a convenient alternative to carrying cash, but if a student misuses the card or is not careful, the results can haunt him or her for years. So is it a better idea for college students to have credit cards or to avoid the temptation altogether?
"There are advantages and disadvantages with college students and credit cards, and they all depend on how responsible the student is, and how much the student understands about credit cards," said Christopher Coyne, Ph.D., associate professor of finance at Saint Joseph's University.
Knowing how credit cards work can be crucial to a student's financial security. "Credit is not free money. It is not even a good loan," said Dr. Coyne. "Credit cards can charge interest rates that banks could not charge without legal trouble."
Although many parents will give their child a credit card in their own name, it is important to remember that negative information will be reflected on the parent's credit history, and not that of the student, according to Dr. Coyne.
If students pay off credit cards at the end of the month, it is an interest-free loan, noted Dr. Coyne, but when they neglect a payment, the penalties can go well beyond high interest rates.
"Problems with credit cards will be reported to the credit bureau, which will affect the credit score," cautioned Dr. Coyne. "A student with a bad credit history can have a problem getting a job, an apartment, insurance, and anything else that has a connection with using credit."
But even the most careful bill-payer can face another credit card danger: identity theft. Dr. Coyne has some advice for safeguarding against this devastating crime.
"Do not lend credit cards or money type items to anyone else, not roommates, not friends, not even family," Dr. Coyne warned. "Many times, identity is stolen by people we know"¦ I guess it comes down to being a little paranoid."
Background: Founded by the Society of Jesus in 1851, Saint Joseph's University advances the professional and personal ambitions of men and women by providing a demanding, yet supportive, educational experience. One of only 142 schools with a Phi Beta Kappa chapter and AACSB business school accreditation, Saint Joseph's is home to 4,150 full-time undergraduates and 2,700 graduate, part-time and doctoral students. Steeped in the 450-year Jesuit tradition of scholarship and service, Saint Joseph's was recently named to the 2006 President's Higher Education Community Service Honor Roll with Distinction for General Community Service. The University strives to be recognized as the preeminent Catholic comprehensive university in the Northeast.
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