Some parents get nervous when they think about their student-age children getting credit cards for the first time, but with a little understanding and preparation, this doesn’t have to be a recipe for disaster. Credit cards are just a tool. It’s up to the person who owns the credit card to determine how they’re used. Of course, we all know someone who is buried in credit card for no good reason, but this doesn’t have to be the case for students.

In fact, students are more sophisticated than ever before when it comes to credit. For those who still have a bit to learn, the basics aren’t that difficult to explain, and can save this person from accruing credit card debt that is very difficult to pay off. Here are those basics.

• A Credit Card Helps Build Good Credit. Before we start talking about what not to do with a new credit card, let’s talk about what good they can be in the life of a student. A credit card is a great way to build a good credit history. Credit history is the complete record of all the ways a consumer uses “other people’s money”. People who start using their credit cards early, and who almost always pay off their balance at the end of the month and don’t carry too many credit cards at one time, will find that they have good credit scores that reflect their good credit behavior. This will make it cheaper to borrow money to buy a car or a house, but it will also make it easier to get a good job or a desirable rental home.
• A Credit Card Can Give Great Benefits. Many of the credit card options for students in Canada offer excellent rewards for using them. A student might get discounts on technology and learning resources, discounts on travel, or cash back at places they enjoy spending their money. If the student is careful to always pay down the credit card balance each month, then this is a better option than simply using cash which gives the student no rewards. It can be something of a balancing act to making sure that balances are always paid while still enjoying credit card benefits, but with practice it will be second nature.
• Low Interest Options Are Available. There are some credit cards made just for students which have very low interest rates, some as low as 0% for 12 months. Other credit cards are backed by the student’s own deposit, which is then that credit card’s credit limit. These are safe ways to allow credit card spending, rewards, and the development of good credit history.

Though a credit card can be used to build dangerous debt, it isn’t hard to understand how to use it in more positive ways. With preparation and self-control, a credit card can be a useful financial tool that, in the hands of a responsible student, can help lay the foundation for a great financial life in the long term.