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A
credit card has become part and parcel of most students’ lives now.
Increasingly cash is being used less and less for the essentials such as text
books and living expenses.
The
owning of a credit card is one of the most important steps towards financial
independence from your parents. It is the beginning of the student being
accountable for his own bills and debts and credit card companies are falling
over themselves to be the ones that the student chooses to be with. It also
signifies the first step on the financial ladder and careful management of your
credit card debt is the golden opportunity to begin to build a good credit
history.
There
are many different offers on the market; some are from reputable banks while
others seem too good to be true, which is normally the case. It
doesn’t matter who is pitching the deal take the time to read the conditions
thoroughly
including
the small print, as now and then the interest rate that is advertised is only an
introductory rate that will be hiked up after six months or so. If you feel
pressurised to make a decision then walk away and think about it. No matter what
the salesperson says there will always be a deal just like the one you are
apparently going to lose if you don’t sign at that moment.
Online
is a quick and convenient way of finding out all the relevant information.
Comparison sites are all the rage these days and can let you look at the
information that you need in one easy to find place. They can show you what
features each company is offering and what the best one for you is. A low APR on
a credit card is what you want, along with no annual fee.
Students Beware - Credit
Cards can be dangerous to your future
Many
students just treat their credit cards as “easy come, easy go.” Whilst this
can be slightly relevant, it is very “easy come” when getting yourself a
credit card, just pop online for a few minutes and it can be over like that.
However, you will see just how “easy go” it is when you get that statement
at the end of the month, then you will see just how easily your money has gone.
Just
when it’s looking like you’re doomed though, you either see or hear to magic
words, “balance transfer.” All you have to do is get yourself a new card and
transfer what you owe on your old one to your new one, and more that often there
is 0% interest charged on this transfer for the first six months or so. Just
keep transferring your money from one account to another every time that the 0%
rate runs out. Soon you will have yourself your own little credit card city.
The
problem is, that all you are doing is shuffling your debt around, and this will
not let you avoid the problem, it just prolongs it from catching up to you. If
you’re already in trouble with one card, is it really a good idea to get
yourself another? The answer is no, eventually this plan of yours to avoid your
debt will come crashing down around you leaving you with even more debt.
Cash
advances are also one of the many misused features of a credit card. With the
cash advance, you can have a lump of cash in your hand even easier than it is to
spend the stuff. Put the card into the ATM and out comes the money, just as easy
as that. A lot better and easier than actually trying to get a loan off of a
company or even off of someone you know. Even better is that there are ATMs
everywhere these days, so whenever you happen to be you can instantly get
yourself the money that you need.
Whilst
this is certainly convenient, it is also a double sided blade, you still have to
pay the money back, but of course you must have known that already. The real
problem is that they are charged at a much higher interest rate than your
average everyday purchases, which means that using them often will make your
debt skyrocket. You should only ever use them if you desperately need to, and
not if you just see something that you want. However, most of the time people
end up using this feature the other way around.
As
the school year continues along its path, students start to get low on money. It
happens to all of them. When they see that you have yourself a credit card they
may say to you, “Could you pay for this round and then I’ll get the money
back to you after I’ve got my next pay check?” So of course you help them
out, you can’t leave a friend in need now can you?
The
problem is though, that by the time your friend gets his or hers next pay check,
they have something else that they have to spend it on, and so they’re not
able to pay you back. Now what do you do? You yourself have to pay the credit
company for what you put on your card, and the company isn’t going to care if
you were helping out a friend but they haven’t managed to get the money back
to you yet. As far as they are
concerned, it’s your debt and it’s up to you to pay it.
Should
you not be able to make the payment due to this, it will go on your credit
report just like every other financial mistake you happen to make in your
lifetime. These mistakes will not be forgotten either. Late
payments, charging over your limit and shuffling money around cards to pay what
you really can’t afford will get you nothing but a bad credit rating.
Now, at the
moment that probably doesn’t bother you, but once you leave college you’ll
soon find that it will bother you, quite a bit in fact, especially when you’re
not able to get yourself a decent mortgage or other big loan. You should keep
these consequences in mind the next time you are asked to bail a friend out,
especially when it is for something they don’t actually need.
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