USING A STUDENT CREDIT CARD
Credit card debt among students is growing by leaps and bounds. A survey by
Sallie Mae, a major student loan provider, showed that 78 percent of
undergraduates have an average of three credit cards and 32 percent have
four or more. The average student credit card balance in 2004 was $2,998, up
from $2,690 in 2002. The survey also found that one in ten will graduate
with balances exceeding $8,000.
***Parents can help by teaching their kids about credit prior to them going to
Finding Your Way
For many of you,
learning to manage credit cards will be your fist
money-handling challenge. Credit cards are ubiquitous. Credit cards do not
seem like real money. Credit cards lead to real debt. There is little
awareness when using the card that the bill still has to be paid. And often
when the monthly statement comes in, the balance is startling. You wonder
how on earth you managed to charge that much!
Then the ostrich effect sets in. It is so easy to ignore your debt level, to
push it out of your mind and continue using the credit card
indiscriminately. It is tempting to say one day I will be earning more more
and then I will pay off my debt. Then never comes.
The reality is credit cards are convenient and useful, but they are terribly
seductive. As a new user of credit, you will want to ensure that you are
ready to manager credit cards to
student credit card debt.
Credit Cards Are Useful
There are good reasons for having a credit card:
To rent a car.
To provide a concise record of spending.
To dispute a charge. Since you have not yet paid fore the item it is
easier to have the credit card company question the charge than if you
To build a good credit history.
Credit cards are a useful financial invention. They have changed our
economy, made life simpler, and challenged us, the users, to more
sophisticated money management behavior.
Our jobs as consumers is to find our own best way to manage
credit, to be fully informed about the cost of using a credit card and
the cost of carrying debt on it, and to understand our unique reaction
to the availability of credit cards.
Establishing Credit with a Student Credit Card
A good credit rating is important, and the first way to establish
your history is to pay your bills on time. Having debt and
demonstrating that you are responsible in making regular payments
will also add to you credit report but do not take on debt for this
reason until you are confident in your ability to make monthly
payments. Having numerous credit cards will not enhance your credit
history, in fact lenders look at credit cards as debt, even is there
is no balance owed. So if you have a lot of credit cards, you could
be turned down for additional loans because it appears to the
creditors that you are burdened with debt.
You can view your credit history as important as your academic
transcript. Some top medical schools now require that admitted
students stay out a year to get their finance in order if they have
poor credit rating and/or are carrying excessive credit card debt.
The reason is simple. Graduate and professional school
administrators know one of the biggest reasons students dropout is
financial. These schools don't want to admit a student only to have
him leave at the beginning of the second or third year. It leaves an
opening the school cannot fill.
Smart Credit Card Use
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