So you're on campus, and you notice a table with "SomeBank USA" written on the side. What's this all about, you may ask? Well, there is a huge credit debt problem in America currently (families close to $ 8000 in debt on average; total debt of over $ 600 Billion!) And companies smell fresh meat in the form of college students. Colleges and Universities are cashing in by forming alliances with these card companies. Naive and none-the-wiser students are racking up debt at alarming rates.
Dammit, they are being kindly taken advantage of at the hands of money-hungry credit card companies! Here's how to hold your own in this financial war:
Treat credit cards like sugar sweets: they're nice to have, but too much use can cause some damage. This is because although there are good reasons for using credit cards, unintelligent use of them can lead to a world of trouble. Establishing good credit is important because one day it will help you when you want to buy a house or a nice car. Further, in case of emergencies, you will want to be sure that a strong credit history will allow you to weather a financial storm. If you have bad credit before you even graduate, companies and debt will have you in a choke-hold. Think about if credit debt is really worth it. Remember, credit cards do not equal free money … just the opposite: the more you use credit cards, the more you'll have to pay later in the form of fees and interest rates.
There are a number of things to keep in mind with credit cards that are of the UTMOST importance. First is the art of spending, ie when and when not to use it. You want to use your credit card for necessities that you can pay off soon. Purchases add up, and before you know it you're on you second post-graduation job and you're still paying for that saturday night study group's Chinese dinner. The only time you are allowed to use your credit card for something a little expensive is in the case of emergencies (this does not include a last-minute gift nor similar expenses).
Credit card companies thrive off of unintelligent use of the card. This is due of high interest rates. Especially true for college students, finance charges can reach 20% and up. Couple that with late fees and annual fees (read: check out the fine print!) And you could pay more than 1000 bucks for a 200 dollar ipod mini … no joke. Follow these guidelines and you'll be fine, do not, and you'll find yourself struggling to escape debt's headlock.
- Do not use credit cards for non-essential items such as fast foods or gifts (even gifts for yourself).
- Pay your bills … on time!
- Make sure you know what the rates and fees are for your card.
- Make it a point to not use it … put it under the mattress or wrap it when in you wallet or purse
- Pay your bills on time!
- Whenever you make a purchase with it, at about 20 per cent to the price to get an idea of how much you might end up paying
- If you're having trouble following these rules, just THROW IT AWAY
We are aware that using your credit card may make you feel like you're part of the "real world" (whatever that is) and raise your self-esteem … you've always seen your parents use them to buy cool stuff and pay later, you see the hot people on tv use them while throwing caution to the wind, – you even see your friends using them, and you want to join in on the fun …
… until your ENTIRE first paycheck goes to paying it off. Then you realize what an idiotic thing it is to go on a shopping spree with a credit card. Lesson learned: TV is tv, just because your parents are more experienced does not mean they know everything, and let your friends make bad decisions (ie, putting everything on theIR credit card) for you.
If you're worried about school expenses, look carefully at school and government loans. These have lower interest rates and the best do not have to be paid back until you graduate, and even then it should not be so bad on a monthly basis compared to credit cards.
Be the smart one on campus and be a sharp credit card user now so you will feel much, MUCH better about yourself (and your wallet) five years from now … trust us.
by Vincent St. James