Sticking to a budget in school

Financial Education
Aug 18 2015

There’s no doubt college is expensive. But thousands of dollars in student loan debt isn’t the only financial burden many students graduate with. A whopping 83% of undergraduate students have at least one credit card, and it’s a pretty good bet most of those cards will not be paid off by graduation day.

First, having a credit card isn’t necessarily a bad thing. In fact, it can help a student establish good credit which can help you get the best rates on auto insurance, rent an apartment or buy a home, and avoid costly deposits on utilities or other services.

The key is to manage your credit card debt and not fall into the trap of thinking “I’ll buy now and pay later.” Here are some tips to help you keep your credit on track.

• Shop around for the best credit card interest rate. Consider using one card for balances that you’ll pay in full and another card with a low interest rate for times when you need to carry a balance.


• Don’t pay interest on items you don’t really need, or for things that will be gone by the time you get your bill. Otherwise, it’s like buying that item marked up instead of marked down!


• Read your credit card agreements and the correspondence you get from issuers; there may be important information in them. For example, credit card issuers can generally change your interest rate with only 15 days written notice – even on a card with a fixed interest rate.


• Always mail your payments for your credit cards at least five business days before the due date. Most credit card companies have steep late payment penalties. Also, your interest rate on new purchases as well as any current balance may be raised to a very high rate if you are late.


• If you pay your debts late, a late payment will likely be reported to the major credit bureaus and will stay on your credit report for seven years. Your other credit card issuers may raise your interest rates if they see you are falling behind on other accounts.


• Call your issuers if you can’t make a monthly payment on time. Ask them about alternative payment arrangements that won’t damage your credit or raise your interest rate.


• Notify your credit card issuer 30 days before you move, and don’t assume that just because you didn’t get a bill you don’t have to pay it. If a bill doesn’t arrive, call your card issuer or lender immediately.


• Try to pay off your total balance each month. Just paying the minimum is a trap. If you pay off a $1,000 debt on a card with an 18% interest rate, it will take more than 12 years to repay.


• Aim to keep your debt payments at less than 10% of your income after taxes. If you take home $750 a month, spend no more than $75 a month on credit.


Want more financial tips? You can learn more about this subject and view other financial education resources on our website..

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