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This article is provided and sponsored by:
ClearPoint Credit Counseling Solutions
It happens at the start of every semester. Credit card representatives target students and give various incentives to get them to sign up for cards. Even though recent legislation has made this more difficult, creditors are still finding ways to target this vulnerable demographic.
How is a college student supposed to respond? By carefully weighing the risks, suggests ClearPoint Credit Counseling Solutions. Applying for a credit card costs nothing, but using one irresponsibly can cost you for years. When you charge a purchase, you are borrowing money. If you don’t promptly pay down your credit card debt, your unpaid balance can balloon with hundreds of dollars in interest fees.
ClearPoint credit counselors offer the following tips to help college students keep their budgets balanced, their debts down and their financial futures positive.
- Avoid the “free t-shirt” and other enticements–Don’t base your decision on a novelty gimmick or a “rewards” card feature. Determine on your own whether you really need a credit card. If you have a practical budget that is serving you well, don’t mess with success.
- Do research – If you are ready to accept the responsibilities of a cardholder, find a card that meets your needs. Look for a low interest rate, no annual fee, and a low charge limit. Avoid “teaser” interest rates, which can expire in a matter of months. “Reward” cards typically carry high interest rates and benefit “big” chargers the most.
- Read the fine print – Before you sign on the dotted line, be clear about the terms of the offer, your credit limit, and any associated fees (late fees, rate on cash advances, etc.).
- Use the card responsibly – Don’t use credit like cash. Small, impulsive purchases can add up to a bundle by month’s end. So can charging your basic expenses. Don’t get in the habit of taking cash advances; they carry a high interest rate.
- Pay on time – Always pay on time and never miss a payment. If you can’t pay off the outstanding balance, make more than the minimum payment. Remember, you are building a credit history that will one day influence your ability to buy a car, finance a house, or even get a job. A bad credit record can follow you for seven years!
- Set a semester budget – Calculate how much money you will need for books, rent, food, utilities and other necessities. Now, compare that figure to the amount of money available to you. If there’s a shortfall, you’ll need to earn some income. If there’s an excess, that’s your entertainment budget. Use it wisely to last the entire semester. Do not rely on a credit card to “get you through.”
- Consider calling home – Your parents may be willing to spot you a few dollars now and then. Just don’t make a habit of asking. They’d probably prefer to help you out now with some spending money than bail you out of credit card debt later on.
- Earn some cash – Missing a few outings in favor of working will not cause you as much pain as accruing a high interest rate credit card balance. Working a few hours a week will give you cash for campus happenings, without jeopardizing your financial goals.
- Don’t charge tuition – Charging tuition to your credit card is not a wise financial decision. There are education loan options that offer more favorable terms and interest rates. Check with your college financial aid office for more information.
Remember, if you end up deep in credit card debt, you should contact a nonprofit organization, like ClearPoint Credit Counseling Solutions. A knowledgeable credit counselor can assist you to get on, and stay on, the right financial path and might be able to help make your credit card debt more manageable. One unique program is the debt management program, which gives clients lower interest rates and other benefits. Contact ClearPoint to learn more.