On a campus as large and diverse as West Chester University, it is hard to believe that the majority of students have a lot in common, but they do. It’s not something they brag about; in fact, most of them don’t even think about it, but one day they will have to face it. What is this commonality among them? According to CNNMoney.com, approximately two-thirds of students are in debt. There are some things students need to know about debt. According to CNNMoney.com, there is “good debt” and “bad debt.” Good debt is anything that is an investment in your future, like a mortgage or student loans. Bad debt is synonymous with consumer debt, and includes credit cards and car loans. Because it can be difficult for a full-time student to juggle a class schedule while working, credit cards sometimes become a student’s primary source for paying for his or her necessities. Students get in financial trouble when they begin to pay only the minimum amount on their balance. According to money experts at CNN, this is a huge mistake because credit card companies charge very high interest rates, especially when a person does not have established credit (i.e., students). Even credit cards aimed at students are misleading. In the end, credit card companies just want their money and are not concerned with whether or not students are struggling financially.
Paying bills on time does affect your credit score. This may not mean anything to an average student now, but according to CNN, a person will need a good credit score in the future to do just about anything from buying a car to renting an apartment. Potential employers may also obtain a copy of your credit report.
CNN says that students looking to establish credit should shop around for the lowest interest rates and keep a low credit limit. Use it only when necessary, and pay it off as soon as the bill comes in. If you cannot afford something, do not buy it. If you are a compulsive buyer, assign a trustworthy friend to be your spending conscience.
This is the most difficult part – do not let your parents pay your credit card bills. You will learn nothing about the “real world,” and you’ll be in a post-graduation shock.
Another good tip that CNN offers is to schedule automatic monthly payments on your creditcard. By doing this, you will avoid any late fees and your credit score will not be negatively affected by late payments. Make a budget for yourself and follow it. This is not easy advice to follow, so don’t give up if you make a mistake.
Student loans are also important. Students should consolidate their student loans, but you have to make payments on time every month in return for a lower interest rate. You will get hit with fees and higher interest if you slip just once. So it might not be such a good idea, unless you take advantage of the scheduled monthly payments.
For additional sources, please see Money 101 on CNN.com and salliemae.com.