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CREDIT CARDS: HANDLE WITH CARE

Credit cards can be great tools or they can be disastrous, depending on how you use them. You may have used credit cards in high school. If so, you probably know the deal.

In college, students are bombarded with offers for credit cards. Tons of them. It sounds great when the envelope says, "Pre-approved: Zero percent interest."

If you really need a credit card, shop around for one that meets your needs and is the best deal. Ask some tough questions: Does it have an annual fee? What's the interest rate (some are very high)? Does the credit card offer something in return such as air miles, discounts, or cash back? Try to find a card with no annual fee, a low interest rate, and premiums.

Ask about credit card deals at your credit union or bank. Check out the Web sites listed below. The first two sites can help you compare the best deals by checking interest rates and fees. The Federal Reserve site has good information on how to choose the right credit card, understand interest rates and fees, and learn the definitions for common financial terms. Check these out!

Credit Cards and College

Many of the current Ventures Scholars say they wish someone had explained how to use, or avoid using, credit cards in college. Credit cards can be very useful when used to good advantage (pay them off at the end of the month). But consider these statistics:

  • The percentage of students holding at least one card in 2001 has risen 24 percent since 1998.
  • Although freshmen have the lowest rate of card possession among undergraduates, 54 percent carry a credit card.
  • The percentage of students with at least one card increases to 92 percent in sophomore year.
  • Eighty-three percent of undergraduate students have at least one credit card—a 24 percent increase since 1998.
  • Average credit card balance among undergraduate students is $2,327.
  • Twenty-one percent of undergraduates with cards have high-level balances between $3,000 and $7,000—a 61 percent increase over the 2000 population.
  • Graduating students have an average debt of $20,402 in combined education loans and credit card balances.
  • On average, undergraduates double their average credit card debt—and triple the number of credit cards in their wallets—from the time they arrive on campus until graduation.

Look at these other sections for more information on credit cards:

INTEREST: THE FINE PRINT
TERMS AND FEES
USE YOUR CREDIT WISELY
CONTROL YOUR SPENDING

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