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We’ve all heard the saying, “it takes money to make money.”  When starting your business, especially if you’re a struggling college student, it’s important to know that you can start your business without money, but having money and using it sure does help.  With money, you can use other’s products and services to jump start your own business; that doesn’t mean that you shouldn’t go the slow free route.  Too many times students will fall into the trap of using a credit card to fund not only their lifestyle but also their business.

How Are College Students Getting Credit Cards?

Getting credit cards into the hands of college students is big business.  My research indicates that for every college student that fills out an application and is approved, the person or company who got the student to apply receives roughly $40.  Setup a table in front of the student union, give away a Frisbee or a foam football (usually cost $1-$3) for every application, if you give away 100 footballs at a cost of $300 (at most), all you need is an 8% conversion rate to break even.  Taking into consideration that most college students have no credit history, I would take a guess you’re looking at a 20% conversion rate easy!

Why Are Student Credit Cards a Bad Idea?

Take this from someone who had a credit card back when they were in college:  Don’t Do It!!  The simple problem comes down to how do you pay off that credit card?  If you’re fully loaded with an 18 hour class schedule, and on top of that trying to get an online business off the ground, when will you have the time to get a job and pay for that credit card?

Unfortunately, not only are parents mostly get to pay for college tuition, they’re also having to pay for their children’s credit cards.  With the current economy and the sub-prime mortgage crisis, I don’t see how some parents are making do!

Should You Use a Credit Card?

I’m not going to lie, having money is nice and helps considerably!  Having money to spend on your business is like having a fast forward remote control; it speeds the process along.  Here are my suggestions for using that credit card:

• You have the cash in your account or else where and the use of the card is a convenience.
• Your business income can pay off the credit charge on a monthly basis.
• The purchase will expand your business to such an extent that the business will be able to cover the charge in short order

To expound on that last point, if the expansion will result in an revenue income over the long run, do yourself a favor: forget the credit card and head to the bank for a loan.  You’ll get a better interest rate from a bank on a loan rather than using a credit card.

A Note to Parents

This is for those parents who are having to pay those credit card bills for their kids:  use a debit card.  They’re taken all the places credit cards are, and when your child empties the account, they’re done.  It will teach them, the hard way, how to best budget their funds.

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