Money and Credit 101
you can’t register for Money and Credit 101 when you go off to your
university or college. There is no such class, but perhaps there should be.
College students often find themselves in over their heads with credit card
debt, or in situations where they’ve been scammed out of money. You can
avoid these traps by following the advice below when you “shop” for
credit cards, apartments, financial aid, and travel opportunities.
According to a National
Consumers League study, 63% of teens say they get most of their
information about money and credit from their parents. So parents, this
article is for you, too. Set a good example by managing money and credit
The National Consumers
League study also found that 58% of teens plan to get their first credit
card sometime between turning 18 and graduating from college. Since the
amount of time college students have available to earn money is usually
limited, be careful not to rack up those credit card bills. Even if you have
a part time job, credit card payments may eat up a significant portion of
card interest rates can be as high as 18%. At this rate, if
you have a $2,500 balance, you are paying $450 a year in interest. While
paying the same amount each month (say $100) is admirable, it will take
you two and a half years to pay off the interest and balance in the
above example. Think about a purchase before you make it, and ask
yourself if it’s really worth it. Consider using your credit card for
- Watch out for card
issuers that raise your interest rate if you make late payments. For
example, if you make 2 late payments within 6 months, the card issuer
may raise your interest rate from 18% to 24%.
- Look for a low
interest rate when shopping for a credit card. If the rate is
introductory (lower for a certain amount of time), take note of when the
rate will go up and by how much.
- Annual fees can
range from $20 to $300, so look at those as well. You may have to pay
the annual fee whether you use the card or not.
- With each credit
card, compare the late payment fee, any fees for cash advances, as well
as the fee for going over your credit limit.