School’s In Session On How To Choose, Use Credit Cards

College students, listen up - especially freshmen. On campus this semester, credit-card companies are going to hunt you down. They will send credit-card solicitations to your dorm mailbox, staff tables around campus and offer you cool handouts if you apply for their card.

Fifty-five percent of college students get their first credit card in their freshman year, said Clearpoint Financial Solutions spokesman Bruce McClary in Richmond, Va.

Bill Hardekopf, co-author of “The Credit Card Guidebook,” available free at http://www.lowcards.com, said an incoming freshman with no debt in September will have about $1,500 in credit-card debt by May.

Many students graduate with an average balance of $2,785 on their credit cards, according to US PIRG, the federation of state public interest research groups in Washington.

Do you want to sink that far into debt before you graduate? Your first credit card is the gateway to a good or bad financial future. Before saying yes to one, follow this advice from experts who know how fast you can mess up if you don’t pick the right credit card and use it responsibly:

# Shop for the best card. Look for the lowest interest rate and best terms. Avoid cards that have an annual fee. Compare cards at http://www.lowcards.com, http://www.indexcreditcards.com, http://www.bankrate.com or http://www.creditcards.com.

# Use the free online calculators. They will show you how much you will repay the issuer of one card versus another when their interest rates and terms differ. There’s a calculator at http://www.bankrate.com.

# Credit is not intended to pay for things you can’t afford. If you can’t pay off your credit-card bill every month, you probably can’t afford what you bought, said Maxine Sweet, spokeswoman for the Experian credit agency in Texas. If you carry over charges for whatever reason, devise a plan to pay it down and get back to paying it off every month.

# Don’t make an on-the-spot decision. Take the application and disclosure statement back to your dorm and read it carefully. Don’t sign your name to a mystery product that you don’t understand, McClary advised. Don’t make a hasty decision to get that really cool iPod offered free for signing up. Call Clearpoint at (877) 877-1995 and run the rates and terms by one of its credit counselors for free.

# Don’t believe everything you hear. A credit-card marketer may offer you a zero percent credit card, said Cherry Hedges, financial education director for the Virginia Credit Union in Richmond. When you get the card, the disclosure statement may reveal an 18 percent APR.

# Don’t use it if you don’t like it. “Once they use the credit card, they’ve agreed to what is in the disclosure statement,” Hedges said. “See if you can get a better rate or cancel the card.”

# Miss payments and you’re a dead duck. “Even if you’re just a minute late, you possibly could be hit by much higher penalty rates,” said Linda Sherry, national spokesperson for San Francisco-based Consumer Action. Your rates could zoom from 18 percent to 32 percent. Worse, if one credit-card company raises your rate, another can, too. Sign up for payment alerts.

News Source : http://www.tricities.com/