Student Credit Cards: A Guide to Responsible Use
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by: barrywaters
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Word Count: 494
Youve just peeled your very first student credit card off the acceptance letter, shiny and clean and all yours. It gives you all kinds of reasons to take it right out to the stores and start spending: gas rebates, a points system that gives you free checks in the mail, even cask back when you use the card at the right stores. Whats not to love? Why not use student credit cards right away?
Before you start taking advantage of all your cards great new features, stop and think. According to a federal report, the average student in New York state has four credit cards and has $3,173 in credit card debt. Thats in addition to debt from their college loans, and is probably accruing interest at a higher rate than the national average. Its a heavy load of debt to carry when youre new to the full time workforce and still looking for a job in your field. And it doesnt take big purchases or heavy spending to rack up. $3,173 is only $793.25 per year, or just $66 per month. Spend one evening at the bar, or buy a few CDs, or charge a couple of your books for the semester, and youve added that much to the debt youll be working for years to pay off.
Is there an escape? Of course. Use your student credit cards wisely. Use these rules as a guide:
* Pay off all or most of your balance each month. You do need to use your credit card to build your credit history. You dont need to carry a balance.
* Charge only things you really need. Its easy to think of credit as fun money, but you have to pay for all those extra treats eventually. Charge only when you truly need an item and you know youll be able to pay it off shortly.
* Dont let the promise of rebates or points sway you to charge more. Its tempting to spend a few more dollars so youll earn enough for a rebate check, but the interest youll pay will cost you far more than the rebate check is worth. (Thats why credit card companies make money on rewards programs.)
* Avoid extra fees by paying your credit card bills on time every month. The average late fee is $35, and too many late payments will allow your credit card company to raise your interest rate steeply. Dont get caught in that trap! If you have trouble remembering to pay your bills on time, setting up automatic payments can be a credit saver.
Be careful with your student credit cards, and youll graduate with no debt and excellent credit. That will make your life easier as you rent an apartment or buy a house, lease a car, and establish yourself after college.
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