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College Students And Credit Cards Are A Bad Combination
Financing your education is considered a bad idea. While gaining an education is important, it's best not to fall into the traps of credit card debt. Due to the downturned economy, it's harder to get school loans. Banks and other lending institutions simply aren't offering them up to everyone anymore.
Credit cards may seem like a fast and simply way to take care of tuition, books and even living expenses while going to school. However, students often forget to look at the big picture. There are four tips that you can follow to help you avoid the mountains of bills that can go along with credit card debt. If you follow these tips, you can graduate college without having a lot of debt looming over you.
1. Avoid The Common Traps
As a college student, you are going to get a lot of credit card offers. These will have some great benefits that go along with them. They will also be catered specifically towards college students. You should get in the habit of throwing the applications out the moment you see them. If you can resist the temptation to complete the card application, you will be better off.
You may want to apply for a single credit card. One will help teach you about managing your finances. Plus, one card can also provide you with a built-in emergency fund if you can set it in your wallet and forget about it.
2. Control Your Spending
If you control your spending, you won't go into credit card debt. You can keep your charges to a small amount. This way when the statement comes each month, you can pay the entire balance. When you pay your total balance by the due date, you avoid interest. The interest rate and the interest paid is what ultimately creates the credit card debt in many cases.
You can actually call your credit card company and have them reduce the account's credit line. If you were authorize for $5,000, that doesn't mean you have to spend the whole amount. If you call the company and tell them you want your limit cut in half, it can help with the over spending simply because you have a smaller credit limit.
3. Use A Prepaid Card
Prepaid cards allow you all the benefits of a credit card without the actual debt. Just as it sounds, the card is prepaid. This means you load the funds onto the card to be used anywhere you go. You can use the card anywhere that Visa or MasterCard is accepted. A lot of prepaid cards are available in the market so you just have to find the one that has the best features and the lowest rates.
When your card reaches a low amount, you can choose to discard it or reload it with more of your own cash. You get to set the amount of spending power by setting how much you put on the card. Using your own money prevents you from having to deal with credit scores or credit card debts. As a result, your credit score will remain in better tact as well.
4. Create A Monthly Budget
You need to know how much you can and can't afford. You will have the ability to pay the minimum payments (or higher) more effectively when that payment is listed in your month to month list of expenses. Once you have the credit card budgeted, you can avoid the temptation of spending too much. You can leave your credit card expenses alone once they reach a limit so you can still afford the monthly payments.
If you don't use the cards responsibly, you can get a higher level of debt than you are comfortable with. If you want to use a credit card for clothing or just to have the latest model of something, think twice about it. Remember that the bill will arrive within a short period of time, requiring you to make a payment on your account. By establishing what you want and what you need, you can make smarter choices about what gets charged to your credit card.
Credit cards can be an educational process. Financing your education is a bad idea but one card can allow you to learn about finance in a whole new way. Owning a credit card can be the opportunity you need to expand your knowledge and build a great credit score along the way.
It's all about acting responsibly. If you accept every card that's out there, you'll soon be in trouble.
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