College Credit Cards: Do or Don't?

With the state of the current economic climate, credit card companies have cooled down the aggressive promotion of college student credit cards to what was once a very lucrative market…you!  However, when there’s a will there’s always a way for you and credit card companies to be in business together.  With this sort of temptation and access to spending during tough economic times, student credit card debt is still a big issue, even if credit card offers and limits have been reduced.

You or someone you know may incur debt to the tune of many thousands of dollars through credit cards alone before even graduating college. This is the result of four or more years of spending like there was no tomorrow. Unfortunately what happens when tomorrow comes around is you’re faced with huge credit card bills each month, compounded by student loan repayments, rent, professional fees?

So how can you avoid the pitfalls of poor student credit card debt management, especially when you have so many daily student expenses to meet?  Do research and teach yourself about student credit cards.  Card companies offer you traditional credit cards with a predetermined credit limit and set interest rate. For many college cards, that interest rate is higher than adult cards based on a lack of credit history.

If you must have a credit card, don’t sign up for a secured credit card that is tied to your savings account unless absolutely necessary. The concept of a secured credit card is to allow an applicant to establish credit with the lender by you tying a set dollar amount from your savings to the card account… less risky for lender.  While some lenders are fair and have you in mind regarding establishing credit, other lenders use this type of card to charge outlandish interest rates and extra fees.  You are better off establishing an emergency savings account on your own.

If you and your parents have decided that you must have a student credit card, DO be very clear on what types of purchases or services will be used for that card account, and what will not be allowed regardless of the circumstances.

Don’t succumb to peer pressure at school just because your friends have high-interest credit cards or your best friend will earn "extra loyal credit card points" if you sign up.  Do teach yourself how to create a budget, follow a spending plan, squirrel money away for a rainy day, and to live within your means rather than relying on the creation of debt in order to maintain a certain lifestyle.  Being a student is challenging to begin with, yet being a student in crushing debt is much more challenging…and not much fun.

For more information on how to create lasting daily money management skills so you can make fun, yet responsible choices in your life, visit www.dollarcampsystem.com and www.dollarcamp.com.