Managing Finances

Beware of the Credit Cards

Soon after enrolling in college your student will be bombarded with credit card offers boasting low introductory interest rates and other gifts and rewards for applying. While getting a credit card can be tempting, there are many things that your student should be aware of so that he or she can avoid negative long-term effects on their financial well-being.

  • Most college students get their first credit card by the fall of their freshman year.
  • More than 80 percent of college students have at least one credit card.
  • College freshmen who have credit cards tend to double their debt by their senior year.

Piling up debt during college years is alarmingly easy. In fact, credit card companies will often use persuasive marketing techniques to get students to open accounts. Once students have credit cards in hand, the temptation is so great that many end up graduating with not only a diploma, but significant consumer debt.

That doesn’t mean college students should avoid using credit cards entirely. If used properly, credit cards can be beneficial in establishing a positive credit history and in providing aid in emergency situations.

In order to establish credit, a credit card should be used for routine expenses, with the balance paid off monthly. It can be a good idea for your student to have a second card designated for emergencies, such as a car breakdown or plane ticket home for a family funeral.

Ideally, your student’s emergency credit card should have a low interest rate, because they may need to carry a balance. If your student must carry a balance on a credit card, the important thing is to make sure they pay at least the minimum payment on time every month.

Make sure your student pays attention to credit card fees. Some credit cards that offer big promotions also charge annual fees, so they need to weigh the value of the offer vs. the cost of the card. No-fee or low-fee cards can be researched at

Another important aspect of your student’s credit card management is to keep a low credit line, which limits the amount of credit they have access to and helps to remove the temptation to overspend. Should they receive a congratulatory letter raising their credit limit, advise them to call the credit card issuer and decline the offer.


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