Credit cards: To charge or not to charge?

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By Kim Bryant

One of the perils for many college students is being broke a majority of the time. In between tuition payments, university fees and personal expenses, students can find their wallets devoid of funds toward the end of the month.

In a society where instant gratification is becoming easier to obtain with each passing moment, the credit card has become a godsend for many and a financial crutch for others.

As a college student, you will without a doubt be inundated with multiple credit card offers. Some credit card companies offer sensible plans with low limits and low interest rates, while others offer plans with ridiculously high limits and high interest rates.

While credit cards help establish credit history, they are to be used with great responsibility. When used irresponsibly, your credit history is affected greatly, which heavily impacts your chance of being approved for a mortgage, car loans and other loans and forms of credit.

The Web site www.studentmarket.com listed some pros of using a credit card:

–You are allowed to purchase needed items and services and pay for them over time (college education, vehicle, home).

–They are more convenient and safer to carry than cash.

–They are useful in case of short-term emergencies (pizza and CDs do not count).

–They may provide you with desirable benefits such as cash back bonuses, purchase protection and frequent flier miles.

–They help establish credit history.

However, with the pros come cons, which were also listed on www.studentmarket.com:

–Easy access to money presents a temptation to overspend and abuse your credit privilege, therefore committing too much future income to credit payments.

–Interest and fees can be considerably high.

–If credit card accounts are not paid as agreed, your credit history will be negatively affected for a number of years. This could affect applications for future credit.

–Available credit may offer a false sense of security and may be thought of as emergency “savings” or as a source of income.

–Expense of using credit may outweigh the perks.

Now that you have read about some of the pros and cons of credit cards, here are some tips to assist you in case you do decide to apply for credit:

–Keep track of how you spend your money. You will often be surprised at how much you spend on food, entertainment and other items each month.

–Spend within your income range. If you cannot afford it, do not buy it.

–Look for cards with low interest rates. Studentmarket.com advises that you be aware of low “teaser” rates that increase after an introductory period. Always know when and how much your rate will increase.

–Look for a card with a grace period if you intend to pay the balance in full each month. This will save you from being charged interest.

–Pay your bill on time each month.

–Try to pay your balance in full each month.

–Establish a low credit limit and stay within that limit.

–Limit the number of credit cards you have to limit your amount of debt.

–Stay organized and keep track of your bills each month.

By being responsible and keeping track of your expenses, you can maintain a credit card successfully. However, if this sounds like too much work to handle, stick to good ol’ cash.

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