College Survival Advisor

Beware the devil incarnate disguised as a credit card: If you don’t have a spare dime in your pocket, that’s still not a good reason to apply for a credit card. Avoid college credit card debt at all costs. There are hundreds of reasons why, but this is a good start: Studies indicate that the combination of student loans and credit card debt sets the typical college student back as much as $30,000 when he or she graduates. Now, if that won’t add pressure to your day-to-day life, what will? 

Student Credit Cards

The problem with credit cards and students is that there is little if any context for their use. It’s only after  students acquire heaps of debt, and interest rates that jump 10 percentage points, that they are truly able to comprehend how disastrous credit cards can be. If possible, take a college budgeting class or financial management class, prior to college. You can also sit down with mom and dad or a trusted family friend to get a quick crash course in college finances. Whatever the case, if you do end up with a college credit card, use it only in worst-case, dire straits, life or death emergencies.

Free T-Shirts

Walking on campus, students frequently run across booths with nice people giving away free t-shirts. All you have to do is sign your John Hancock on the dotted line of a quick credit card application. Easy enough. The problem is, if you sign-up for six t-shirts in two months, the next thing you know, you have six credit cards in your wallet; talk about a surefire method for temptation and financial mayhem. The moral of the paragraph: You don’t need another ugly t-shirt and you surely don’t need another $6,000 in college debt. Avoid free credit card offers at all costs.

Instant Gratification

College credit cards foster the mindset of instant gratification. Walk into a store; walk out with $200 of clothing, and you don’t spend a dime. It’s magical. Or, at least, at the onset. Here’s the ugly truth: Credit cards advertise low monthly payments of $20-$30 a month. Funny though, how the interest on that card is typically an outrageous 18-23% per year. As a student, barely scraping by, if you rack up credit card debt and pay only a minimum monthly payment, you could very well end up paying only the interest on that credit card for the rest of your life (no kidding). If you think that’s bad, imagine having three or four credit cards like that.

How Credit Cards Work

Let’s break down the buying power of a student credit card hard at work: Go to your favorite clothing outfitter and purchase the shirt of your choice (let’s say it cost $48). Take the price of the shirt and multiply times five. Ultimately, using the credit card, the shirt will cost around $240. Here’s the way it works: Purchase an item on a credit card, with an interest rate of 18%. But, let’s say you have an existing balance, so you aren’t able to pay off the shirt (as well as the total credit card balance) for several months, or maybe even years. You will end up paying for that shirt four-to-five times in interest charges, alone.

Develop a Good Credit Rating

The best way to build credit in college is to start slowly by doing basic things, such as paying utility and wireless phone bills on time. Once you get out into the workforce, banks will offer low interest credit cards in droves. Choose only one. Try to use this credit card only when you have to and pay off the balance each month to avoid interest charges.

Full Student Banking

Instead of a major company-issued credit card, consider another financial option. Find a national bank with a student-oriented package that includes a credit card, debit card, checking and savings accounts, with online bill paying, bundled into one. A plan like this allows students to cohesively manage all aspects of banking and credit card usage under one roof. This is a brilliant solution for the busy, perhaps less financially experienced college student. Look for a bank convenient to your college dorm or living area. A student banking search can be done on the Internet to find the best college banking value.

Best Student Credit Cards

In the event you must have a student credit card, be advised as to the best options. Visit an online credit card site or do a Google search of “best student credit cards.” This will unleash hundreds of options. Highly recommended is a 0% APR credit card for the first full year, with a nominal spending limit. This will allow time to learn how to manage spending. If, after three-to-six-months, you have proven your ability to manage spending, then continue with the card, but only with monitored usage. However, if your spending habits are out of line with specified parameters, pay the balance and discontinue using the credit card, period.