Don't let easy credit in college put your financial future at risk


BY JIM FUQUAY
Knight Ridder Newspapers

(KRT) - Parents of today's new college students probably remember when getting that plastic badge of adulthood, a credit card, meant getting their own parents to co-sign the application.

How quaint.

Credit-card applications now pour in starting when kids are in high school, and forget about needing a parent's signature. By the time they're college freshmen, more than half of students have their own credit cards. By sophomore year, it's up to 92 percent, according to a 2001 study by Nellie Mae, a student-loan company.

The Nellie Mae study also found that 47 percent of college students had four or more cards, and the median credit card debt was $1,770, up from $1,236 in 2000.

If there's a silver lining to all this fiscal gloom, it's that a history of paying off credit cards is a good way to build a solid credit record. Given that even adults don't do a particularly outstanding job of that, students who keep their credit-card accounts up to snuff will be favored borrowers when it comes time for, say, a car loan.

But if it's convenience you're after, why not use a debit card? Like a check, it takes money directly out of your checking account. And just about every business that takes credit cards takes debit cards as well.

With a debit card, the pro and the con are the same: You can't spend beyond your available checking balance, and hence you can't run up any debt.

If you do get a credit card, here are some tips from the National Federation for Credit Counseling on how to use it responsibly:

_ Don't get lured by a "free gift." Think twice about these quick offers and read the fine print. With annual fees and high interest rates, the "free gift" may be more than you can afford.

_ Look for the best rate. Read the fine print in the marketing material or contract that explains the interest rate and penalties. For example, a zero percent interest rate may rise as high as 20 percent or more, once the introductory period ends. Visit Web sites such as www.bankrate.com and www.cardweb.com to compare rates.

_ Review the card's annual fee, monthly fees and penalty fees (late and over-the-limit), and always pay on time.

_ Don't overuse your credit card, and make sure you keep a cushion for emergencies. Pay off your balance as quickly as you can.

_ Get your credit report at least once a year to verify that it's accurate. Guard your personal information, and report it immediately if your credit card is lost or stolen. Get a written list of the latest charges to verify the purchases, and dispute unauthorized charges in writing.

 

 

 

 

More Lending News

We make it simple for you..
Free Home Equity Loan
Quote  from 2-3 competitive
lenders nationwide.
Are you losing money every
month with the compounding
interest of credit cards?
Apply Now for a Home Equity
Loan that will Save you$$$
No Appraisal Required for
Loan Amounts up to $30,000
Request Info from Lenders
Stated Income Loans are
Available up to 100% of
your home's value.
Consolidate Your debt & Lower your monthly payments Apply Now for a consolidation Loan that will Save you$$$


Get Prequalified| Second Mortgage | Home Equity Loans | Home Equity Line of Credit | Home Equity Loans | Loan Programs | Apply Now | About Us | Disclaimers

This is not a commitment for a loan or an ad for credit as defined by paragraph 226.24 of regulation Z.
Copyright, 2003 -2004, Home Equity Loans Center.