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Should college students have credit cards?

Should the first time you get a credit card be when you're heading to college? According to some, the answer to that is no. Why should you stay away from credit cards, though?

The answer is pretty simple. It's easy to be under peer pressure to spend more, and you are just learning to budget on your own. Of course, every person is different, but learning to set up a budget without parents providing input and guidance can be an important part of life. That doesn't mean it has to be a part of life that builds up substantial debts.

So, what tool is better than credit cards? Debit cards. These link to banks, or in some cases to prepaid amounts of money, which allow young adults to learn to manage their spending without going over budget. Some cards link into apps on smartphones, too, so students can see exactly how they're spending their money.

Can't credit cards help if a student doesn't have enough money to make ends meet?

While it can be an attractive thought that you could use a credit card to cover last-minute expenses or to close the gap between pays versus what you need to spend, the truth is that most college students already come away from school with student loans that will cost hundreds a month to pay back. Between 2004 and 2014, the average student loan balance rose by 74 percent, showing just how much impact a student loan can have on a person from the beginning of schooling. Some student loans, like federal loans, are a bit flexible in how they're paid back, but that's not true of credit cards.

After college, many people with credit card debts may have to consider consolidation programs or focus only only minimum payments. If you find you can't afford the debts you've accrued, it might be time to discuss bankruptcy or alternative plans with your attorney.

Source: Star Tribune, "College students should skip the plastic," Chris Farrell, Aug. 06, 2016

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