Credit Cards can be beneficial or detrimental in budgeting expenses during your college career. In order to meet your educational, social, and personal needs, exploring the option of using a credit card may be beneficial when expenses cost more than your bank account balance. Here are some positive and negative effects of using credit cards.

Some positive effects to using credit cards are that they:

• Allow you to establish a good credit history
• Aid in the convenience of paying for unforeseen emergencies
• Record your purchases
• Give you an instant loan
• Offer security from theft
• Paid for in full each month, they are an interest free loan

Some negative effects to using credit cards are that they:

• Invite impulsive buying
• Trap you in debt with high interest rate and high annual fees
• Leave room for an addictive lack of budgeting behaviour
• Distort the concept of spending someone else's money

This exercise is designed to help you think critically about the positive and negative effects of using a credit card. There are five brief scenarios below of students who do not receive help from their parents for money. You must analyze their situations and determine what is best for their individual needs in college and organize their short-term priorities so that they do not end up in financial debt. In the essay boxes below explain your reasoning for each individual's scenario.

1. Shawn decides to attend the college that that offered him the best financial aid package, five hours away from his home. He has a part-time job during college to pay for his on campus living. Shawn's college offers him financial aid and loans that help him with paying for college. This year, at the end of his first semester of his second year, he is beginning to run out of money and is unable to pay next semester's living expenses such as, the phone bill, books, and even his dorm room.

Do you think Shawn should have a credit card? Justify your answer below.

2. Iesha attends a college where most students are financially stable. But Iesha is unable to afford things her friends can and it's beginning to make her feel inadequate for her social environment. When she passes by the credit card representative's table in her student center she has an idea. She thinks that having a credit card will allow her to buy clothes and go out with her friends without having to find a job that will interfere with her college life.

Do you think Iesha should have a credit card? Justify your answer below.

3. Eva is in her fourth year of college. She has a credit card already and has charged books, car repairs, auto insurance, and other personal items throughout the last three years at college. Eva is still paying a high interest rate on her card and probably will not be able to pay it off until after she graduates. It seems to Eva that she never has enough money to make it to the end of the semester. She feels that she needs another credit card that has a low interest rate. But, she knows that most low interest rate cards have high annual fees.

Do you think Eva should have a credit card? Justify your answer below.

4. Derek is a second-year student in college and wants to study abroad in Spain in his first semester of his junior year. He has never had a credit card before and is thinking about having one for when he goes abroad. He hears that the exchange rates are better with a credit card than traveler's checks. Derek is afraid that he will be in debt if he gets a credit card and his parents do not support his decision. But, he doesn't know how else to pay for a semester abroad because he probably will never earn enough money at his work-study program at school.

Do you think that Derek should have a credit card? Justify your answer below.

5. Greg is an athlete at his university and receives a scholarship, financial aid, and has student loans. He works as a waiter ten hours a week at a local restaurant to earn some extra-spending money. Since Greg's car needs repairs he rides his mountain bike to work and around campus. The mechanic told Greg that it will cost him $1,500 to have his car repaired.

Do you think that Greg should have a credit card? Justify your answer below.

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