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Credit Worthy: College is much more than higher studies for students looking forward to being economically independent. Along with better job options the wait on graduation from high school is for having personal credit cards and unlimited access to plastic money. But few realize the hidden costs and unsuspectingly fall for freebies offered by credit card companies. By senior year the student is burdened with debts accrued from indiscriminate swiping for entertainment and lifestyle shopping. Since most cards are obtained from direct marketing companies and forms filled without parental advice the cause for financial muddle is generally unawareness about interest rates, minimal or no fee or stipulated grace period for making payments.

Students cannot be held solely responsible for limited knowledge as most parents assume that they know about commitments involved with purchase of credit cards. At same time credit card companies have their own profits to think about and student is left to work out economics of credit card payments. Quantity of cards and services offered take a back seat to quality and instead of settling for single card or card with parental co-signature they tend to flaunt as many as they can.

Saying Yes To Card: With each year number of students using credit cards keeps multiplying and with it the accumulating debt making it imperative for students to understand different terms and significance of smart spend. Saying yes to credit card is similar to saying to taking vows as one has to follow the dotted line of rules and regulations. The advantages of carrying credit cards outweigh the disadvantages as a card can be used in emergencies, replace cash and increase purchasing power and most important develop a good credit rating for future professionally and personally. If student has propensity to spend more an option could be a debit card or credit card with parental co signature. Debit card operates like checking account with outstanding deducted from student’s account and when limit is reached the spending binge is blocked.

There are different types of credit cards but the three useful and prominent ones are credit cards issued by banks such as Visa, MasterCard etc., Travel and Entertainment cards such as American Express or Diners Club and House or store cards useable in same name stores. Before deciding on any or all it is advisable to check on agreement terms and this can be done through internet or consulting parents and friends. Credit card is not for one time use and student needs to decide if he/she will be able to handle the fee and payments as no card is free whether used occasionally or indiscriminately. Sometimes students decide on credit cards with low interest rates and do not bother to check whether same rate would continue or increase once introductory offer expires. Once student is caught in debt it is a difficult to maneuver out single handedly and bad credit tags along impacting employment opportunities, mortgages and loans. A credit card is only an instrument in making life simpler and not a replacement for resources.

An Independent feeling: A student might feel a sense of déjà vu in using a single credit cards but in long run it facilitates in putting together a creditable credit score. A student credit score is based on payment history, outstanding debts and types of credit in use. The information is used by employers to judge risk to organization, by insurance agencies, cellular and cable companies and lending institutions. Credit score is similar to examination grades judged differently by different companies having their own standards. Before a negative report leads to loss of creditability it is best to obtain copy of credit score for review. Most important stop making new purchases and clear debts with parental help or through student debt consolidation plans.

Another precautionary measure to avoid getting into debt is reading terms of agreements on back of monthly

statements. Any illusion of card being a mere replacement for paper cash is fast displaced. The agreement terms to be verified are: Revolving agreement through which student pays full or partial payment each month based on outstanding balance. This type of card is generally issued by department stores, gas and oil companies and banks. The second agreement is the Charge agreement whereby student pays full balance each month and skips interest charges. The third is Installment agreement in which student signs contract to repay a fixed amount of credit over a specific period of time. This scheme is used to pay off automobile, furniture or any other major expense commitments. In case of fraud on part of any credit card company or wrong charges the Fair Credit Billing Act helps in billing disputes with student having option to contact card issuer within 60 days on receiving bill containing error. The card issuer is legally required to acknowledge letter within 30 days to correct or explain error in writing within two billing cycles. Credit cards come under legal preview and student should find out legal reimbursement against unfair credit discrimination on basis of gender, marital status, racial, religion, national origin or source of income.

Misuse. A student will tell you that having an independent credit card or cards is the best thing to have happened to him/her. The reason is convenience whereby it cuts the need to turn to parents or skimp and save to buy the digital camera seen on amazon.com. Most important incase of emergency money is available and helps build credibility when making down payments for cars, latest cell phones or apartment or even planning a trek or holiday.

If credit card is used wisely it is an asset but if swiped randomly turns into a nemesis stalking the waking and sleeping hours till paid off. For starters students should opt for pre paid credit cards with parents so that they are notified every time a transaction takes place. It pays to remember that a credit card has to be paid for with interest and if parents are co-signatories they can impose restrictions if over stepping credit limits. Whatever type of card or options selected it is usage and managing budgets that initiates a debt free financial situation from day one of college.

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