College life is one of the most unforgettable chapters in everyone's life. It is often a person's first taste of real independence, and their whole life is ahead of them. But this can also be a time where a college student can make decisions that have repercussions that last for many years.
There are a ton of common mistakes that college students make with credit cards. They do it without fully realizing the impact that this will make on their lives in the years following graduation. After you graduate, you need to look for your first 'real' job, find a place to live, start paying back your student loans, and begin your post-college life but all of these things can be affected by careless use of credit cards.
Credit card companies frequently target college students specifically because they often are not savvy about what borrowing money really costs over time. As a result, many college graduates begin their lives burdened with debt that takes many years to pay off.
Here are some examples of the many mistakes that college students make with credit cards:
1.Opening an Account to Get Free Stuff
This is one of the more effective come-ons that credit card companies use to lure college students. They are especially fond of setting up booths near the bars. They do this so that when you're barhopping with friends and your judgment is already compromised, you get caught up in the moment and sign up to get one of those cool, goofy hats that they're giving away.
The problem here is that the card is now in your wallet, and can be used to make impulsive purchases that add up and must be dealt with sooner or later.
2.Carelessness about Credit Card Security
One of the cooler aspects of dorm life is being able to float from room to room and hang out with all of your friends. But, the open-door policy can also make it easy for the less honorable among us to slip into your room, snag your credit cards, and then run amok with your plastic.
Depending on the terms of your credit card, you may or may not be liable for the charges. But, if the lender determines that you were negligent about keeping your card secure, that tab is yours to deal with.
3.Unnecessary Cash Advances
Credit cards make it exceedingly easy to get cash from most any ATM but this is another trap. Tapping your credit card for pocket cash is just too easy, and before you know it, there is a balance of $750 in your account and you have little or nothing to show for it. Also, the interest rates on cash advances are frequently much higher than your regular rate and you get nailed that way too!
4.Carrying a Balance
You probably know someone in their 30's that is still paying off the credit card debt from their college years. Seventy three hundred dollars may not seem like much money when you're looking forward to a nice post-graduation salary, but with all of the other expenses like student loans, rent, utilities, telephone, car payments, etc., that salary gets eaten up fairly quickly by necessities.
5.Mom and Dad Will Probably Take Care of It
Depending on your parents, you might be able to go to the well once or twice on this. But, sooner or later your folks are going to decide that a lesson in money management is a much more practical solution to your spending habits.
6.Treating For a Night Out When You Cannot Afford It
Everyone wants to be highly regarded by their friends, but putting an entire evening's tab on your credit card when you cannot easily pay for it next month is a huge mistake. Long after your friends have forgotten your generosity, your credit card won't and that charge from 5 months ago will still have to be reckoned with.
7.Blowing Off a Payment
This is catastrophic to your credit rating. It takes a long time to build your credit-worthiness with lenders and one episode of "No worries, I'll just take care of it next month" will negatively impact your credit score. It will also take years to disappear from your credit report.
8.Putting Spring Break on a Credit Card and Reporting it Stolen
This may have worked for some in the past, but credit card companies are hip to the game. If you falsely claim that those charges are not yours, you may be liable for criminal charges as well as the balance. Plus, at the very least, this is theft and if you manage to get away with it, your conscience will be there to remind you over and over again.
9.Opening an Account to get a Discount from the Merchant
This is another angle that credit card companies use to prey on your vulnerabilities. It may seem like a good idea at the time to open a new credit account with a clothing store that you already like to do business with.
The prospect of 25% off everything that you buy with their card seems like a great deal but most often people use this as justification to buy a bunch of stuff that they don't really need and when the statement appears in their mailbox, there is no 25% off from that number.
