Credit Cards: An unknown college danger

It s back to the books for college students. But there s something you need to warn them about before they hit campus. Dionne Stephenson with the University of Delaware says, “They don t prepare. When they have stands over here and when they give you the free college T-shirts. People fill out the applications and then a credit card shows up.” Students on campuses admit, they know very little about credit cards and their pitfalls. All they know is they re being lured with free stuff.

Once they get the card, reality sets in. Drexel University student Christine Lopez says, “I got a credit card about a year ago and I thought, Hey, I ll pay stuff back on the credit card because it has cash back. and that totally didn t happen. I am in debt.” Financial experts say parents need to talk to their teens before they leave.

Curtis Arnold with www.cardratings.com says, “Students now, particularly freshmen are going to get barraged, inundated with credit card offers.” The best advice is to show your teen your credit card statement. Talk to them about the minimum payment and how detrimental it is when you only make the minimum payment. Explain to them what rotating balances and credit scores are. Make sure your kids understand how credit card debt can affect them well into their future.

Bill Hardekopf with www.lowcards.com says, “If a student runs up significant credit card debt and doesn t pay that credit card off in a timely manner, that can have a significant effect when the student graduates, tries to get their first car loan or their first home loan. The interest rate that a lender is applying will be significantly higher if the student s credit score is poor.” Now credit cards are not all bad.

They re often the first step for building credit, you just have to be careful and use those cards wisely. Financial experts say college students should: Get only one card Avoid the department store credit cards, They have the highest interest rates. Set a credit limit, for example 500 dollars.

Set up email alerts that tell you when your credit card payment is due and when you re approaching your credit limit.