Students Using Credit Cards to Build Credit

We all know that a lot of college students have the propensity to get themselves into trouble with credit cards. Regardless of whether it is a result of lack of maturity, or for any other reason, it is a reality.

The other reality is that these very same students also need to begin establishing a strong credit history. And the fact of the matter is that credit cards are probably the easiest and most convenient way to do it.

The new credit card reform legislation will require students to show proof that they have the ability to pay their bills in order to be approved for a card. They can still get a card but they will be required to get a cosigner such as a parent to share the responsibility.

There is an alternative, however, but it still comes with some risks. The alternative that I speak of is a joint credit card account. This is when the student is either added to their parents existing account, or a new account is opened with both the parents and students name on it.

The student will receive their own card with their name on it and will be subject to the same rules, liabilities and credit limits as the parent. The advantage here is that the parents can monitor the activity on the card very easily.

It must be stated that if the student acts irresponsibly the parents, or whomever else is on the joint account, will be liable as well. That means that there is a risk that will automatically be assumed when opening the joint credit card account.

The other alternative is, as stated above, for the student to get their own credit card with the help of a cosigner. Again, the cosigner is held liable for any and all activity on the account. The advantage is that the cosigner can also closely monitor the activity because they will have full access to the account.

Before completing a credit card application, all involved parties should be fully aware of what their responsibilities are. Using credit wisely is a very important step in the maturation of the student and will serve them well throughout their lives.

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