|
|
|
|
[ Thursday, Nov. 12, 1998 ]
Research, financial planning key to successful credit future
By KATE DAILEY
and TRACY WILSON
Collegian Staff Writers
Lurking outside Willard Building, the HUB and even Beaver Stadium, credit card company representatives are luring students with the promise of free gifts and added buying power. But unfortunately for some students, what looks like just a chance for a free T-shirt or duffel bag can turn into a financial disaster. While credit cards can be useful tools, it is essential students are aware of the risks and responsibilities before beginning a credit card account. Establishing good credit history in college can be the key to future financial success. When applying for a credit card, students should consider several factors, according credit counseling services and even their peers. -- Evaluate finances: "Before students decide to have a credit card, they should make sure they have the funds to pay for the credit card," said Peggy Leister, Credit Counselor at Consumer Credit Counseling Service of Northeast Pennsylvania. Many times, students find themselves in trouble after spending beyond their means, Leister said. Making a monthly budget or spending plan can help prevent this situation.
Credit card terms
|
"I had money when I got (the credit cards), but then after I (made purchases), I didn't have money to pay the bills," Paul Nuschke (senior-electrical engineering) said.
-- Research available options: Students should investigate the initial and long-term rates before looking at the other incentives many cards offer, such as frequent flyer miles and consumer discounts.
A low annual percentage rate and low or no annual fee are things students should look for when considering getting a credit card, Leister said. An APR can either be fixed or variable. Although fixed rates may be higher, they will never change while variable rates may fluctuate.
She also recommends a card with a low credit line, which sets a maximum spending limit to prevent students from charging more than they can afford.
"I get a card based on what it can do for me," Jon Phillips (senior-management services and information systems) said.
When choosing his card, Phillips said he considered more than a low interest rate. He also looked at different reward systems companies use. Phillips' card gives him 5 percent credit toward a new automobile for each purchase he makes.
-- Stay informed: Companies can adjust credit lines and APRs even after the card is in use, according to the GromCo World Wide Web site (www.gromco.com).
Low introductory APRs can often switch to variable rates. If a student makes credit payments consistently, companies will often increase the credit line.
"I didn't know that they increase your APR and then increase your limit, which is worse because you can spend more," Marla Mazzocco (junior-geographical environmental engineering) said.
-- Avoid Overcharging: Whenever possible, students should try to use cash. According to the CCCS of Western Pennsylvania, it is best to ask oneself whether or not one would make the same purchase with cash before charging. They also recommend paying as much money up front as possible for large purchases.
-- Be Responsible: Keeping track of cards and disposing of old receipts and bills will prevent account information from getting in the wrong hands, according to a CCCS press release.
Before signing, students should make sure they understand the whole agreement. Students should also make sure their cosigners are financially secure, as cosigners are responsible for payments missed by the borrower.
"Never cosign with anyone, not even your relatives," Scott Karstetter (junior-electrical engineering) said, who had credit problems as a result of cosigning with a family member.
Just because credit cards carry responsibility, students should not avoid the benefits that can come with owning a credit card.
"If students only have one card and use it responsibly," Leister said, "they can do quite well."
