Credit Care & A Free T-Shirt

Do the benefits outweigh the risks?

It happens the start of every semester. Credit card representatives blanket campus with t-shirts, coffee mugs and other gifts to entice students to apply for a card. Students also find tempting credit card offers tacked to college bulletin boards and stuffed in their mailbox.

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 plenty. 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.

A 2005 report by Nellie Mae Corporation, a student loan organization, found that 42% of college freshmen have a credit card, and an average outstanding balance of $1,500. Once that student reaches senior year, the balance has nearly doubled, to $2,850. It only gets worse in graduate school. Nellie Mae found that the average outstanding balance on credit cards held by graduate students in 2006 was $8,612.

ClearPoint credit counselors offers 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 …read more

    Source: CBS local Boston


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