Many Are College Bound, But are Students Credit Ready?

WEDNESDAY, AUG 18, 2010

Around this time of year, college students start to pack up their clothes, their dorm room decor, waive goodbye to the parents, and say hello to college freedom! Having to make financial decisions comes along with that freedom and realizing that a credit card is often an essential part of college life, Consumer Credit Counseling Service of Central New York ® suggests the following credit card and budgeting tips:

Set up a budget. Always be aware of how much money is in your checking and/or savings account(s), as well as how much you're obligated to pay when the credit card bill arrives. A good way to keep track of spending is to record all purchases in your checkbook as though you've written a check, deducting the amount of each purchase. When you've exhausted the money in your checking account, it's time to stop charging!

Shop around for the best card. With the CARD Act that took effect in February 2010, young people between the ages of 18 and 21 will not be able to get credit cards unless they show that they have sufficient income, have a cosigner, or complete a certified financial literacy course.

If you are able to get a credit card, remember that not all credit cards are the same. Don't select a credit card company on a whim, or simply because they have a booth set up at your college. Research which one is best for your circumstances, spending habits and paying ability. Five things to investigate when shopping for a credit card include:

 the annual APR (annual percentage rate)
 if an annual fee is assessed
 the length of the grace period
 the dollar amount for fee/penalties
 the balance calculation method

Use prepaid cards or a debit card whenever possible to avoid spending money that is not readily available and accessible. Make sure to record all debit charges to avoid overdraft fees.

 Do not take advantage of the card, or let the card take advantage of you. It is very easy to let charging get out of control especially since a lot of places accept credit/debit cards (ex. fast food restaurants, bars, etc). Never max out your credit card. If possible, use the credit card for emergencies only.

 Be aware of the risks of credit fraud. Know that identity theft and credit card fraud are serious issues, but there are ways to protect yourself. Never let someone else borrow your credit/debit card. Do not leave your card or receipts lying around for anyone to see. Also, never give out your credit number unless you know it is legitimate company or organization. When in doubt, don't give it out.

Establishing and maintaining good credit is very important. How you handle credit today will affect your access to credit later. Banks (including student loan providers!), prospective employers, credit card companies, most utility companies and property management companies run credit reports when you apply for a credit card or loan, apply for a job, purchase a home or a car, rent an apartment or sign up for utilities. Paying bills on time is a great start to establishing good credit.
Know what's on your credit report. All U.S. consumers are entitled to a free copy of their credit report every 12 months. The report can be ordered online at www.AnnualCreditReport.com or by calling 1-877-322-8228.

Help is available. If you are struggling with payments to your creditors, foresee it happening in the near future, or just need budgeting help, contact Consumer Credit Counseling Service of Central New York® and talk to a Certified Credit Counselor today!