Martinsville Bulletin, Inc.
P. O. Box 3711
204 Broad Street
Martinsville, Virginia 24115
276-638-8801
Toll Free: 800-234-6575
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Sunday, August 19, 2007
By ALICIA SOLOMON - Special to the Bulletin
Floppy disks. Check. College ruled paper. Check. Raman Noodles. Check. That used to be just about all that was needed when I went away to college. Now the list looks something like this: I-Pod, cell phone with camera, laptop, jump drive, credit card, laptop low jack, and organic whole-grain vegan low-salt soba noodles.
With two children, a house, a dog and a part-time job and by now many years out of college, I can hardly keep track of my keys much less all the small (apparently necessary) electronic devices of today. If you are headed off to college, what I can pass on by learning the hard way is keeping track of your financial future. And if you are a parent, think of this: getting your student to focus on financial health, as well as academics, will be important to his or her long-term success.
Today’s college students are overrun with credit card offers. To a young person with newly found freedom and independence, getting a credit card can be an attractive offer. Starting to use a credit card wisely starts a person off on the path toward establishing a solid credit history.
Unfortunately, inexperience and lack of understanding can turn this potentially good thing into a harsh life lesson that will take years to correct.
Regular discussions between college students and their parents about wise credit card usage is necessary. It will not only help the students avoid the pitfalls but it might also keep the parents in check with their own accounts. Here are a few key points to talk about:
• Don’t be tempted by free giveaways or low teaser rates, which often rise dramatically after a few months.
• Look for cards with no annual fee and a lengthy grace period before finance changes begin. A good place to comparison shop is www.bankrate.com.
• Carrying too many cards can damage your credit score, as can high balances. Try never to owe more than 25 percent of your credit limit on any card.
• Investigate other fees such as those for cash advances, late payments, balance transfers and exceeding the credit limit.
• Know that every time you apply for a credit card it has a negative impact on your credit score. The ten percent discount on purchases today are not always worth it in the long run.
In 2006, the average cap-and-gowned student graduated with $20,000 in student loan debt and $2,300 in credit card debt. If they do not charge one more thing on their credit card and paid the minimum balance, it will take 82 months to pay it off. That is 21⁄2 years longer than it took them to get their degree.
College is a big step in life. Whether the education comes from satellite classes, the local community college or out of town, make sure that part of that learning includes how to head toward a positive financial future. It is much easier to stay out of debt than it ever is to get out of debt.
For detailed lessons check out “What’s My Score,” a financial literacy program sponsored by Visa USA, which aims to raise young adults’ awareness of the importance of understanding and improving their credit scores (www.whatsmyscore.org).
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