Credit Card 101 - Part 2
Advice for all college students
"If you can eat it, wear it or drink it, it is not an emergency" - advice given by credit card counselor, Kim Rebel.
According to Business Week Online in an article written by Susan Berfield,
"Today's soon to be 30 something's are the first generation to be the most indebted in modern history"
Some shocking facts:
- Case of 30 something's, Cristina and Manuel who are getting married and combining 51 thousand in debt between them.
- 7 out of 10 college students, who drop out of school, drop out because of debt problems.
One of the first problems of credit card use is one that most people are not aware of is the amount money that you actually pay for those things that you charge. First off you have to look at credit for what it is a LOAN that you are being charged interest on Like any other loan you must pay to use their money, so if you charge an exciting spring break trip to Mexico for say like a thousand dollars, making minimum payments at 19 -21%interest that trip will cost you according to Barrett's Young Money Magazine article, $2,329 before you are done, DOUBLE what you originally paid.
Educate yourself in credit card use and make better choices;
Use your cards for emergencies only:
Credit Card Counselor, Kim Rebel tells students to live by these simple rules for credit card use;
1. Keep only one credit card
2. Keep the limits low
3. If you have a balance do not use your card again until you have paid it off
Otherwise, you may end up like the newlywed couple with a combined debt of 51 thousand, Cristina states that this is not quite what she saw for herself at this age, I thought, I would be living it up at 29" instead, they are making payments of 1,256 a month on their debts.
Some final words from Karin O' Callaghan author of Money Management for college students.
"Think of credit cards the same way as chocolate: they are easy to find, they are enticing, but once you put the weight on a credit card balance, it is next to impossible to lose!"