Credit cards and college students: A bad mix
Here are some tips on how not to graduate with a mountain of credit card debt:
1. Try to avoid the many traps that college students fall into. When you are in college, you may find that offers for credit cards come flying in. Resist the temptation to sign up for all the card applications you receive. One should be enough to teach you how to manage your finances.
2. Learn how to control your spending. It's best to keep credit card charges to a small and manageable level so that you can pay off the entire balance when you receive the statement each month. Interest will not accumulate if you pay your balance by the due date.
3. Consider a prepaid card. A prepaid card is loaded with your money, and is not a loan that needs to be paid back. You simply use it for all your purchases and when the balance has run out, you buy a new card, or "reload" it with your own cash. The temptation to spend beyond your means is gone, as you know you have a set amount of purchasing power.
4. Set up a monthly budget. This can help you control how much money you have to spend, and let you know what your actual expenses are.
"If you do not use credit cards carefully, you could pile up more debt than you can handle," says Ursula Menke, commissioner of the Financial Consumer Agency of Canada (FCAC), in a press release. "It's easy to use cards for purchases like the latest electronic gadget or clothing, until the credit card bill arrives. Understand the difference between what you want and what you really need."
It's never too late to expand your education and learn the pitfalls of financing your education with a credit card. What better opportunity for you to expand your knowledge and build up an excellent credit score in the process.
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