I know many students are heading off for their first year of college. Watch out for the credit card trap. It is a fact that every student is going to get hit by all kinds of credit card companies offering to give them credit. We hear all sorts of things like "you need to start building credit" or "you need a card JUST for emergencies." But the fact is, young people don't have to have credit cards. They are better off learning to manage their own money that they actually have by using debit cards. Don't rush right in to using credit. Paying cash isn't a bad thing. Yes, it may limit what you can afford but you will be glad later.
Read what Kiplinger says about students getting credit cards...
The average college freshman has $1,533 in credit card debt, according to a study by Nellie Mae, a student-loan provider. And that figure grows to $3,262 by the time he or she graduates. (Plus many have thousands of dollars in student-loan debt on top of that.) Half of freshmen carry plastic. And by the time they reach their senior year, 96% do -- with two-thirds of seniors carrying four or more credit cards.
So if everyone's doing it, it can't be that bad, right? Wrong. When the bills come due and interest charges pile up, too many students realize they took on more than they can handle. In fact, 7% to 10% of students will drop out of college due to credit problems, says Robert Manning, author of Credit Card Nation. "The initial freedom offered by credit cards may become financial shackles by the end of their college career," says Manning.
Once you start falling behind financially, you could sentence yourself to a lifetime of high rates on everything from car loans to mortgage payments to insurance premiums. That starter credit card your freshman year of college could potentially wind up costing you thousands of dollars down the road.
Read the complete article at Kiplinger.com:
© 2007 Randy Haugan Amway Quixtar IBO Financial Common Sense. Reprint provided to Don Wilson Quixtar IBO site.
© 2006-2007 Don Wilson Quixtar IBO. About Don Wilson & Nancy Wilson.