Have a kid who is going to college soon? With a credit card in hand? If you're tired of lecturing your kids about the importance of managing their credit and having them tune you out, let them tune me out instead.
The Topeka Capital Journal, the paper of record for Topeka, Kansas, recently ran a Better Business Bureau article that offered some tips for students heading to college this fall, and how they should manage a credit card, should they end up applying for one.
The Better Business Bureau's advice: "This is an important time to remember that young people between the ages of 18 and 24 carry an average credit card debt of $2,002. It's vital that anyone considering getting their first card takes the time to be selective about which card they choose…"
I'd like to add: Selective doesn't mean getting a credit card from your hometown bank or from your college. Sure, it's nice to have that hometown and university loyalty. But as someone who took a credit card from both my hometown bank and my college for no other good reason than they asked if I wanted a credit card and I said yes, I wish I had had a clue that you can shop around for the best rates. I can imagine if you're an 18-year-old thinking about your future and wondering what it's going to be like to live in a dorm room, if that's the route you're going, that if you're even reading this, how easy it will be to nod and tune out the BBB's sage advice, but they're right. Be selective. Your hometown bank or college may have a great credit card, but don't take their word for it without doing some investigating on your own.The Better Business Bureau's advice: "Be aware of your credit rating and learn to manage it before things get out of hand." I'd like to add: Frankly, I'm not sure, 24 years ago, when I enrolled in college that I even knew what a credit rating was. If you're 18 and you understand that high credit ratings -- or credit scores -- mean that banks and credit cards won't be afraid to loan money to you, you're already ahead of where I was. The Better Business Bureau's advice: They suggest college students become acquainted with the terms:
- APR ("the annual percentage rate tells how much you'll be charged in interest for carrying your balance over from month-to-month. Look for a card with the lowest possible rate.")
- fees ("hunt for a card that has a low annual fee or none at all. Look as well at the balance transfer fees, cash advance fees and late fees. They can add up quickly")
- rewards ("many cards now come with cash back or rewards programs. Take the time to learn about how a card's program works and take advantage of it in order to make the most of your spending").