| College Credit: Tips for Students About Credit With new college students heading to campuses across the country every
summer, now is the time to talk about managing student finances.� With
credit cards available to all students, it is more important than ever for
students to understand how to use credit responsibly.
Parents, Talk to Your Student.� Credit, when used responsibly, is a
valuable financial tool.� It sounds simple, but most young adults don't
know enough about how credit cards work to use them correctly.� Be sure to
sit down with your teen and talk about credit and finances before they leave for
school.� Make sure your student is aware that misuse of credit can have
detrimental effects long after college.
Credit May Affect the Job Search.� Many students don't understand that a
credit report serves as a "second resume" for many college grads looking for
work, particularly in government or the financial services industry.� Also,
it is important to remember that credit cards are not the only accounts that can
affect a credit record � music, book and video clubs, utilities, housing leases
and car payments are other potential credit pitfalls for the average college
student. Responsible management of finances while in school may help land that
first big job.
Develop a Spending Plan. The most important tip for managing student credit
is for students to live within their means.� Parents can help their
children learn to track and plan spending.� Also, be sure students know not
to charge more than they can pay off in full each month.� Living within a
budget can offer the entire family some peace of mind.
Have Only One Card.� Have only one major credit
card account open.� Do not open multiple bankcards or any high-interest
retail store or gas cards.� Most major credit cards are accepted at
department stores and gas stations, so there is no need to open other accounts
that may encourage overspending and will weaken a student's credit rating, which is based
partly on available credit from open accounts.
Keep the Limit Low.� Students (or parents on co-signed cards) can ask
any card issuer to set a low credit limit or reject limit increase offers in
order to keep spending within manageable bounds.�
Avoid Compulsive Use.� If a student has trouble controlling their
spending with a credit card, find creative ways to make card use more
difficult.� These could range from something as simple as leaving the card
at home when the student goes out, to freezing the card in a bowl of water � the
required thaw time mandates a waiting period before a purchase can be made.
E-Charging Adds Up.� Students should be especially careful about
compulsive credit card use online.� Purchases are easily made, easily
forgotten and add up quickly.� Students should keep close track of their
online spending and be sure to keep it within their monthly budget.��
Choosing a Card.� A card's interest rate doesn't matter if the balance
is paid in full every month.� Choose a card that will be accepted
everywhere and offers a rebate bonus, such as long distance phone time or
frequent flyer miles.� If you must carry a small balance, however, stick
with a card with the lowest interest rate available.
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