It’s become a college certainty. Even before this year’s freshman class settles into their dorm rooms, the credit card offers will be rolling in. Most will bring limited credit lines and relatively high interest rates. They are easy to get, and there are few income requirements to worry about.In 2000, 78 percent of college students had at least one credit card. The average credit card debt per student was $2,748, according to Nellie Mae.
It’s true that used well, credit cards can help a student establish a respectable credit history. But they can also leave financial bruises that don’t heal until long after the diploma has yellowed on the wall.
Students often learn about the high cost of credit cards the hard way – after they run up balances.
Because student cards tend to have high interest rates, you can really end up paying through the nose for one semester of fun. Carry a balance at your own risk.
Students seeking credit cards should view teaser rates with caution. What will the APR be after the introductory period? Also be aware that one late payment and the rate could be jacked up to 20 percent or more, and there will be a hefty late fee to boot.
While cash advances may be tempting, check out those interest rates. They can be as high as 22 percent for cash withdrawals. And watch the annual fees.
It’s best to get by with one or two low-limit cards. A credit limit of $1,000 is more than enough for most students. Keep those balances down. Pay your bills on time.
Falling behind on credit card payments hurts your credit, and a bad credit rating can affect your ability to rent an apartment, or buy a car or house. The mark stays on a person’s credit record even if the bill is later paid in full. Insurance companies and employers may also check credit.
Keeping your credit clean as an undergrad is serious stuff.