Monday, 23 November 2009

How to Avoid Student Credit Card Debt

Credit card companies typically employ a very sly tactic in getting college students to register new credit cards. They usually give a very low interest rate for the first year. After the first year, the interest rate will begin to increase. Fortunately, since college students are still very young, their credit cards' limits are a lot lower than their adult counterparts who are in the corporate world.

Here are few tips on avoiding credit card trap

Look for a card with the lowest fixed percentage rate and a low or no annual fee. Read the fine print carefully - many low or 0% introductory rate offers expire in 6-12 months.

Never use your credit card for a cash advance. The fees and repayment structure associated with a cash advance are outrageous.

Have a budget! Your credit card is not free money. Budget your money so that you can pay off your balance at the end of each month. If you can’t pay off the balance, always make more than just the minimum payment.

Pay your bills on time, otherwise you’ll pay a late fee between $25-40 every time your late with a payment. Late payments will also increase your chances of having your percentage rate raised on all your credit accounts.

Request a low credit limit somewhere between $700 - $1,500. The object is to have credit available to meet some of your expenses and in case of an emergency.

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