Credit Cards and College Students

by Leah Gorham

The use of cerdit cards among college students has risen in the past year, including students using credit cards to pay for tuition, textbooks, school supplies, and other direct education expenses that could be payed for by less expensive financial aid. According to a 2009 study by Sallie Mae, a saving- and paying-for-college company, 84 percent of undergraduates had at least one credit card, up from 76 percent in 2004. Moreover, the study found that more than three-quarters incurred finance charges by carrying a monthly balance. Surprisingly, 60 percent of students experienced surprise at how high their balance had reached, and 40 percent said they have charged items knowing they did not have the money to pay the bill. These statistics demonstrate the need for better financial planning among college students and wiser use of credit cards.

Some steps that can be taken to help keep finances in check while in college are keeping parents involved and having a family discussion about a monthly budget, tracking expenses including small daily expenditures that can add up to larger sums, setting financial goals, getting a part-time job, and trying not to use more than 10%of allowed credit on a credit card while paying off as much as possible on a monthly basis.

Despite all the risks associated with college students and credit cards, they can be a good tool to start building your credit history, as long as you can be sure to pay off the card each month and act in a responsible manner. If you do make the decision to use a credit card as a college student, make sure to find a card with no annual fee and look for the lowest interest rate possible. Also, you may want to consider if a card offers rewards, but since these cards often carry a higher interest rate it is important to only chose this option if you ensure that you will not carry a balance.

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