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

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 and 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.





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