Credit cards and College: Staying out of Debt

Credit cards and College: Staying out of Debt

Using credit cards in college may be enticing, but can potentially lead to financial disaster. Being educated and using credit cards with care can help you avoid the grief concerning credit card debt.

You will have an excess of credit card offers in the mail and even on college campuses. Booths set up on campus may lure you with free shirts and objects. But don’t be fooled, as they have more to gain than you do. Here are some things you should know before you apply for a credit card:

Find a card with a good APR. The Annual Percentage Rate is the amount of interest you must pay for any part of the balance you haven’t paid off. The lower the percentage, the better the credit card. Generally for young students without a credit record, finding a low APR credit card may be difficult. A credit card with an APR less than ten percent is ideal.Don’t be fooled by credit cards that offer zero percent APR as these are for a short period and revert to rates that can exceed eighteen percent. Take the time to find the best card for you.

Pay attention to annual fees. Make sure the card you apply for doesn’t have any annual fees. As long as you pay attention to fine print, you can find a card with no annual fee and low APR. Don’t waste your money.

Have only as many cards are you need. Dependent college students should only have one card. It should be used for emergency purposes and situations in which the balance can be paid in full. Independent students may need to have several cards, but keep the number of cards to a minimum.Over half of college students acquire four credit cards by the time they graduate. Having extra cards may encourage more spending. The average college student is over 2000 dollars in credit card debt.

Pay off the balance. Pay on time and pay in full. Paying a credit card bill late will not only cost you an exorbitant late fee, but it may also increase your APR. Try to use your card only for necessary payments and pay in full. That way you avoid any interest payment.

Avoid cash advances. Cash advances carry one of the highest interest rates out there. This should only be used as a last resort.

Don’t use a credit card to pay tuition. Use loan money to pay for college, not credit cards. The interest rate on loans are considerably lower than credit cards. Since college loans are geared toward students, you may not need to pay interest on subsidized loans while in college. Using a credit card to pay tuition is a last resort.

If you’re already in too deep. So you have too much debt. If you can’t pay the minimums, contact your creditor first to avoid late fees and more interest. They will be likely to work with you to find a way to make your payments easier. In some cases they may lower your minimum or your APR.

Being educated about credit card rates and fees and being responsible about spending and use can prevent you from accumulating too much debt while in college. Just because you plan to make a lot of money once you graduate, does not mean you can spend more than you make. Following these tips can save you a lot of money and grief.