==== ====To Compare Credit Card Offers and Find the Card Thats Right For You, please visit:www.CreditResourceUSA.com==== ====College is the last care free step before real life begins, or at least it should be. Students should beable to go to sleep each night with the only pressing responsibility being the English examtomorrow morning. They should still get to live in a world where although they cant afford muchmore than the occasional late night drive through Taco Bell or downloading the latest hit single, atleast they arent worrying yet about paying a mortgage, most forms of insurance, utility bills, or thecollege loan that is allowing them to get an education.Unfortunately, for many college students this is not the case. Many are already burdened withfinancial pressure because they are accruing credit card debt, in some cases over $7,000 worth ofit. Increasingly, students are even coming to campus with credit card debt in hand. ConsolidatedCredit Counseling Services Inc. reports that 20% of freshman got their credit card in high schooland nearly 40% sign up for one in their first year at college. With the abundance of on-campus,mail and Internet card offers giving low introductory rates, freebies, and bonus airline miles, its notsurprising to find that according to a 2001 Nellie Mae study 83% of all undergraduate studentshave at least one credit card and carry an average balance of $2,327.The problem of high credit card debt has many implications for a student. Some end up droppingout of college all together so they can work full-time just to pay credit card bills. If they are able tostay in school, but have in the process ruined their credit rating, it can affect their ability to rent anapartment, afford insurance and even get the job that will help them to pay off their debt. Evenrelationships suffer as a result of financial stress. There is also a psychological affect on students.The stress can lead students into depression, and in a few cases has been a contributing factor tosuicide.Of course it hasnt always been like this. According to Dr. Robert D. Manning, Professor atRochester Institute of Technology and author of Credit Card Nation, in the late 1980s studentcredit card limits were around $300-$500 and parents were required to co-sign. But when creditcard companies began making a lot of money during the 1991 economic recession, they startedlooking for new markets and found it in the student population. Issuers dropped the co-signingrequirement and started raising limits, which, when combined with parents increasing financialpressures and higher costs of education, gave students a way to fund themselves through college.And students are an easy market to tap into. In his article "Credit Cards on Campus," Manningwrites, "Credit card companies encourage fantasies of easy money because students are soprofitable: teens have financial naiveté, high material expectations, and responsiveness torelatively low-cost marketing campaigns, high potential earnings, and future demand for financialservices."Credit companies advertising to the vulnerabilities of young students is not the only factor that
goes into the current trend. Most students simply have not received the education in personalfinances and credit card management that they need to meet the onslaught of offers. According toConsolidated Credit Counseling Services, Inc only 15% of high school students take a personalfinance class. And, according to the Jump$tart Coalition for Personal Financial Literacy, a non-profit organization which promotes financial literacy at the K-12 level, parents for a variety ofreasons are not talking to their children about the privilege and responsibility that goes along withusing a credit card.Dr. Carol Carolan, Executive Director and Founder of the Center for Student Credit CardEducation, says that the single best thing parents can do to help their children avoid the pitfalls ofcredit card debt is educate them. Parents need to talk to their children about it early on andregularly. Dr. Carolan suggests the following tips for parents.When a child has reached an appropriate level of maturity and understanding of personalfinances, co-signing a credit card can be very beneficial. Get a credit card with a low limit and noannual fees (visit the "Card Reports" section of our website to comparison shop for student creditcards). Discuss with your child the details of the credit card including interest rate on purchasesand cash advances.Review all the expenses every month. Show your child what finance charges might apply if thebalance is not paid in full and on time. This includes any interest, fees, and penalties. Be a goodrole model.Experts dont all agree on the appropriate age for a first credit card. Dr. Manning, forinstance, argues in his article Credit Cards on Campus that having them at an earlier age mayactually result in fewer debt problems later on." Other experts argue that waiting until the junior orsenior year in college is best. The bottom line parents need to realize is that once students reachthe college campus, they will be inundated with credit card offers and will be able to get a cardregardless if they are supported financially solely by their parents.And talking with students involves more than mere calculations of fees, interest rates, andbalances. Students need to understand the messages they receive through advertising, thedifference between a want and a need, as well as the lure of money. Give students a healthy,realistic perspective of money and material possessions and they will be better equipped to makewise decisions.Universities and colleges play a huge role in the current trend of high student credit card debt.Some invite credit card issuers onto campus because they receive revenue as well. But others arestarting to recognize the problem and are restricting the activities of credit card companies oncampuses. Manning states in his book Credit Card Nation, that "During the academic year 1999-2000, over 400 colleges and universities formulated official policies against on-campus credit cardmarketing and nearly 600 other schools are considering similar restrictions."Some institutions like Rochester Institute of Technology (RIT) and the University of Central (UCA)Arkansas are even beginning to require classes in personal and consumer finances. Mary AnnCampbell, CFP, professor of personal finance at UCA and professional speaker with MoneyMagic, Inc., has a mission to educate students, educators, and adults about money. She iscurrently working on her dissertation about college students and credit card debt. Campbell isresearching the best methods of reaching college students through a high impact presentationwarning them of the perils and privileges of plastic. Like other experts, Campbell is not againststudents having credit cards. In fact, she says it is easier to get one as a student and can help
them build the good credit history needed after graduation. But students do need to be educated.Campbell gives the following tips and reminders for students.There is true magic to compound interest when its working for you (as in an investment or savingsaccount), but true devastation when its working against you (as in credit card debt). Even whenyou buy something on sale, the interest alone can double the price. Account for everything. Keeprecords of each credit card including the interest rates, fees, balances, due dates and purchases.Campbell suggests a good way to do this is to setup a spreadsheet in Excel. This will also keepyou organized so you dont miss another payment. The only way to get out of debt is to stopcharging and always pay more than the minimum. If more than one credit card has an outstandingbalance, then begin paying off the one with the highest interest rate first, then go to the nexthighest interest card, and so on. If in trouble, talk about it with someone you trust and respect.This could be a parent, teacher, or friend. Hiding it doesnt make it go away. Credit scores canmake all the difference in the world for good or bad. It can take many years to recover from a badcredit score. Learning to use credit cards responsibly is a gift. Seek to gain knowledge andwisdom. Credit is a privilege and it is the students personal responsibility not to let it become aperil. Campbell says, "The magic comes from you." While in college, students need to thinkoutside the box, but live financially within the box. Credit cards can be an invaluable tool for astudent. While providing security and convenience, if used wisely a student will build the goodcredit rating that is needed to secure other consumer loans, jobs, and lower insurance rates aftergraduation. Dwayne Blew, a member of CreditBoards, a forum dedicated to credit issues, is oneexample of a student who didnt buy things he didnt need and paid his credit card balance in fulleach month during college. Now he is reaping the benefits of a good credit score. Dwayne says,"One of the reasons youre going to college is to improve your lifestyle once you graduate. Afterputting so much effort into school, why let something small like a credit card end up ruining it all?"Many excellent resources exist to help students both avoid and get out of the credit card debt trap.Comparing credit cards is an important step in finding the best one to suit your needs.CardRatings.com makes this search simple and easy by allowing you to research the best ratedstudent credit cards. Consider utilizing the services of a nonprofit credit counseling service. Bevery careful when considering a credit counseling service, though, as many counseling servicesare scams, including nonprofit services. Consolidated Credit Counseling Services, Inc. has a free,downloadable Budgeting Guide for students. Dr. Carolan has written a booklet titled The ABCs ofCredit Card Finance - Essential Facts for Students that can be ordered online and it will be mailedto individuals free of charge.Message boards or forums are a great source of information. You canpost questions, concerns, or comments and a real person will respond with real life information.Campbell says they are a gift and can even become a support group. You can join theCardRatings.com Message Board for free. Even if your school doesnt require a personal financeclass, take one if its offered.http://www.debtsmart.com/, created by Scott Bilker, author of the best-selling books Talk YourWay Out of Credit Card Debt, Credit Card and Debt Management, and How to be more CreditCard and Debt Smart, contains several tools to help consumers deal with credit card debt. Thefinancial decisions students make in college have a long lasting impact on their future. They arelearning how to use and manage various financial tools vital for life in the "real world". When usedwisely, credit cards are one tool that can open the doors for a life unencumbered by financialburdens.
Amy L. Cooper-Arnold has been a staff writer for http://www.cardratings.com/ since 2004. Herarticles have been republished by respected publications throughout the country, including YoungMoney Magazine, E/The Environmental Magazine and About.com. Amy recently graduated withhonors from Austin Peay Univ. and is currently taking graduate-level classes.Article Source:http://EzineArticles.com/?expert=Amy_Cooper-Arnold==== ====To Compare Credit Card Offers and Find the Card Thats Right For You, please visit:www.CreditResourceUSA.com==== ====