Tips For College Students Regarding Credit Card Usage

You’ve probably heard from a lot of credit card companies offering you what seems to be a great credit card deal. While having and using a credit card wisely is a common tool to build a good credit history, falling into a credit card trap can ruin your credit for a long time.

Why should this matter? Credit card companies have been successful in aggressively marketing credit cards to college students. According to a 2005 study published by Nellie Mae, a student loan company:

• An estimated 76 percent of undergraduates carry at least one credit card.
• Fifty-six percent of all undergraduates surveyed for the study reported obtaining their first credit card at the age of 18.
• The average outstanding balance on undergraduate credit cards was $2,169.
• Seventy-nine percent of undergraduate credit card holders regularly carry a balance on their cards, paying interest on those balances which increases the amount that must be repaid to the card company.

It’s no secret that paying off credit card debt can be difficult. The more you owe, the harder it is to get out of debt. And with credit card debt, paying your way out can be very expensive.

Good credit can open doors for things like renting an apartment, getting a loan for a car, or even buying a house. Bad credit can put even the most basic essentials out of reach and make borrowing money more expensive, or in the worst case, impossible. A mistake you make when you are 18 will stay on your credit report until you are 25.

Whether you’re considering your first credit card, or you’ve been around the credit card block, here are some tips you can use to build and maintain strong credit and make a credit card work for you.

Tip # 1: Beware of the hard sell, freebies, and the “easy credit” traps.

You’ve probably heard these come-ons:

• Gotta have it!
Credit card companies love to make you think a credit card is indispensable. Think twice before signing up for a credit card you may not need.

• Have a freebie!
What does that “free” mug or tee-shirt really cost? Once you’ve agreed to the terms set by the credit card company, you may end up paying a lot more for that “freebie” they gave you when you applied for their card.

• Does the card require an annual fee? If so, you will end up owing the credit card company a fee even if you never use the card. Miss a payment or pay late? That will cost you a fee, typically around $34.00.

• Exceed your credit limit? Get ready for another charge. You get the picture. They know how busy students can get, and how easy it is to miss a payment, pay late, or go over your limit. Don’t be enticed by a “freebie” that may cost you much more in the long run. Those freebies may simply not be worth it. You may also check your credit reports to see if you already exceed your limit. Check this post about free credit report without using a credit card. It can help you out.

• If you don’t like it, you can cancel at any time!
Don’t believe it. Many consumers have reported difficulties canceling credit cards they no longer want. Either the customer service representatives were not helpful or they couldn’t cancel the card because they carry a balance they cannot afford to pay off. Many times, those balances were driven up by fees charged on their accounts for late payments, and interest rate hikes.

What often begins as “easy credit” can end up becoming a credit card trap that’s difficult to escape.

More of this great tips and advices here at Free Credit Card Reports blog soon. Feel free to come back or bookmark this blog for future reference.

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Choosing The Best Credit Card Tips and Advice

This is a very basic but important tips written by Barbara Cooper, a Consumer and Family Economics Educator at Springfield Extension Center, University of Illinois. I hope this can help or give you some important details in terms of choosing the best credit card that suits your needs.

Here is the start of Barbara's great advice. The free credit card reports blog find this one extremely useful.

By law, credit card companies must tell consumers the interest rate and other costs of using their credit cards. This information is in a disclosure statement and is set up in a table format. You’ll find disclosure statements on credit card applications. If a card offer is made by phone and the card has an annual fee, the caller must verbally give you the disclosure information. If the card has no fee or the fee doesn’t go into effect until the card is used, the caller can mail you the information.

Understand Credit Card Terms
Annual percentage rate (APR) - The annual interest rate that the card issuer charges on the unpaid balance of the credit card. Some credit cards have set rates; for other cards with variable rates the interest rate changes. The disclosure statement gives the guidelines used to decide what variable interest rates will be. If a credit card offer has an unbelievably low rate, it probably is an introductory rate. After the introductory period is over, the rate will increase. A
low rate would be 5% while 21% would be high.

Grace period - The length of time you have to pay your bill before interest is charged on the purchases. Most companies offer 20 - 25 day grace periods. Even though companies have grace
periods, most charge interest from the day you make a purchase if you already have a balance on the credit card.

Annual fee - A charge you pay once a year for the right to use a credit card.

Minimum finance charge - The least you’ll have to pay if you have a balance on a credit card.

Transaction fees - Fees you have to pay for cash advances, late payments, or charging over your credit limit.

Periodic rate - The APR divided by 12


Compare credit card terms.
Call three banks, credit unions, or savings and loan institutions to find out about the terms offered on a Visa or MasterCard. Or compare the terms on three credit cards you have now or on credit card offers you’ve gotten in the mail. Read the disclosure statement to find this information.

Analyze the offers.
Issuers of credit cards use different methods to compute the monthly finance charge. Most companies use the average daily balance method to figure finance charges. They add the new purchases to any old debt after the end of the grace period and divide by the number of days in the billing cycle to compute the balance on which you pay interest. Beware of a “two-cycle” average daily balance method. It uses the total of the average daily balances for two billing cycles even if you paid the balance off the previous month.

Credit card choice depends on how you use your creditcard.
For example, if you always pay your monthly bill in full, the best type of card is one that has no annual fee and gives you a grace period so you don’t pay interest if you pay your balance each month. If you carry a balance on your credit cards, look for a lower annual percentage rate and the average daily balance method of computing the finance charge If you carry a balance on your credit card, use the information below to estimate how much you pay each year to use your credit card. You’ll find your average monthly balance on your credit card statements.

Calculate Finance Charges
Average monthly balance you carry on card ______ x the periodic rate of ______ = interest paid ______ x
12 months = ______ + annual fee of ______ = Total yearly cost of ______.
(If you get cash advances, pay late, or go over your credit limit, add the transaction fees to your total.)

Example:
Average monthly balance of $1250 x periodic rate of 1.5% (1250 x .015) = interest paid $18.75
x 12 months = $225 + annual fee of $20 = Total yearly cost of $245

Hope the above article/piece of advice enlightens you up. More of the great tips regarding credit cards will be posted soon here at the Free Credit Card Reports blog.

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Credit Card As A Part Of Daily Expenditures

If you are using your plastic cards or simply your credit cards to purchase something or buy something everyday, then you are making your self in a big trouble in the near future. I know that it was really cool and really convenient to shop all day and drink or party all night using your credit card. That is the the only time you can feel that it was cool.

How about when your bill comes up and you see your credit card report or your credit bill goes up about 200%? Not cool isn't it?

In my opinion and based on my personal experience, it is much wiser to use your credit cards during emergency cases only. That is the time you will found it useful and helpful.

Also, try to look after for promo periods or those time where in you can purchase something using your credit card with zero interest rate for a period of time.

This simple tips alone can save you a lot. It can help you out to be debt free and worry free in the near future.

Oh, before you go out and do your shopping spree, why not take a look at this free credit report without credit card post of mine. I think knowing your credit report or history certainly can help you out in proper usage of your credit cards.

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Credit Card History Evolution

In this post, I will discuss about the evolution, history and the very first credit card usage and facts. This is not about the credit card expenditure history but in case you want to have your credit history, visit this post of mine about free credit report without a credit card.

So let us start now with the credit card history and useful information.

The 18th Century Credit Card History

Have you ever stopped to think about the evolution of your credit card? This introduced the idea that people who couldn’t afford to buy “big-ticket” items could make regular payments until the full cost of the items were paid.

First Credit Card Users/Creators

Western Union, with their goal of providing good customer service, give away some of their more prominent clients a kind of metal card to be used in deferring payments – interest free – on services used. The year was 1914; the system or the card itself is called “Metal Money”.
Ford Motor Company also take part in creating the consumer credit business. In the late 1930’s, American Telephone and Telegraph or AT&T created the “Bell System Credit Card.” Other industries followed – railroads and airlines introduced same type of cards. From there, the system grows fast rapidly.

Here is an excerpt of the history from historyof.net website.

The Credit Card Evolution

After seeing these trends of increased travel and spending among those who held charge cards, banks became interested in credit cards and online banking.
Since they were in the business of lending money, they saw the potential of gaining income by charging interest on credit cards.

1950 marked the real beginning of the credit card most of us are familiar with today. Diner’s Club, Inc. introduced the first credit card that could be used at a variety of stores and businesses. Merchants were eager to accept the card because they found that credit card customers usually spent more if they were able to “charge it”.

The first bank to implement this system was the Franklin National Bank in New York. In 1951, after screening applicants, they issued the Charge-It card to those approved for credit. This card could be used by consumers at local retail establishments. It worked much like the credit card systems of today – the consumer made a purchase using the card; the retailer obtained authorization from Biggins Bank, and closed the sale.

Other banks saw the same potential. The credit card industry was booming! Charge card issuing and processing became too large of a task for the banking industry to handle. In 1966, fourteen US banks had formed Interlink, an association with the ability to exchange information on credit card transactions. In 1967, four California banks had formed the Western States Bancard Association and introduced the MasterCharge program to compete with the BankAmericard Program. By 1969, most independent bank charge cards had been converted over to either BankAmericard or Master Charge cards.

As the bankcard industry grew, banks interested in issuing cards became members of either BankAmericard or MasterCharge. Their members shared card program costs, making the bankcard program available to even small financial institutions.

By the mid 1970s, the credit card industry started exploring international waters. In 1979, with the improvement of electronic processing, electronic dial-up terminals and magnetic stripes on the back of credit cards allowed retailers to swipe the customer’s credit card through the dial-up terminal, which accessed issuing bank cardholder information. It also decreased credit card fraud.

There we have it. The credit card history and evolution. Hope I have given you some insights about those plastic cards that used to be a metal one. If you want to correct something or contribute in this post, please leave it on the comment section.

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Credit Card Usage and Safety Tips

It is really nice to have credit cards. In case you have something that you really want to buy or sometimes when emergency cases occur, credit cards can really give us some relief.

Although, credit cards are often misused and financial planners end up in trouble paying the balance and the charges putting them in the deep well of debt.

That is why I posted the following tips, to help you out in your credit card usage.

Keep in mind that credit cards are only a short term solution, and should never be used to provide finance in the long term. Just keeping that tip alone can save you in financial debt in the future.

Here are the tips I want you to take note of.

1. Never use your credit card as a way of financing purchases that you are not certain you will be able to afford in the near future. If you have a job for example that is ending in 2 months, then ensure that your credit card balance will be zero for that time. This will eliminate the risk of you not being able to keep up repayments, should your contract not be renewed or you not being able to get a new job.

2. Always check your statements in detail, and try and do this as often as possible. The longer you wait, the less likely you will be to remember transactions, and the less time you will have to do something about it.

3. Calculate the total amount of expenses you are likely to incur over the course of a year, by applying formula within a providers proposal, to your likely repayment and borrowing requirements. Now work out what is the cheapest.

4. Protect your account details at all cost, and ensure that you are careful about the companies that you contract with. If in doubt, pay with cash or go elsewhere.

5. Only carry the credit cards with you that you intend to use. If you carry too many then you are just asking for trouble, because it will take you longer to notice when they go missing.

6. Hold onto any receipts and keep a note of all credit card transactions that you have been party to. If you are ever in doubt about a transaction contact your credit card provider immediately.

7. Remember that you can always churn. Always keep abreast with pricing in the market, and don't be scared to move provider to attain better prices, this can often be the best way to ensure that you save the most money.

Do you have anything to add or to say? Just leave it on the comments section. Also, feel free to read my post regarding Free Credit Report Without Using Credit Card.

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