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Question: My son will be leaving soon for his first
year in college. I hear the horrors of kids who get over
their heads in debt in no time. How can I help him?
Answer:A recent national study indicated that a majority of
college students have their own credit cards. They also find
when they arrive on campus that credit card companies are
very happy to sign them up with incentives such as free
t-shirts and other premiums. The key is not to avoid credit
but to learn to use it so it works for you. Help your son
learn good Consumer skills now and he will reap the benefits
of using a credit card. Although your son may dodge any
attempt that you make to help him understand how to use
credit responsibility, now is the time to try get the
message across - not after he calls home helplessly over his
head in debt.
Credit used wisely offers many benefits. Carrying a
credit card means your son won't have to carry large sums of
cash. A credit card allows for a way to cover expenses
during an emergency. Making hotel and car rental
reservations by phone often requires a credit card to
guarantee the reservation, and credit cards also offer
benefits such as frequent flyer miles, and discounts on
rented automobiles, hotel rooms and other perks.
Credit is not an advantage, however, when
individuals use credit to stretch their income and add
credit charges to their bill every month. The Federal
Reserve reports that 47.7 percent of households using credit
cards pay interest charges each month.
Some credit cards have annual fees and high
interest rates. Suggest that your son check around with such
resources as www.bankrate.com until he can find a card with
no fee and a low interest rate. Annual fees can vary from $0
to $75 or more. You also may pay fees for late payments.
Sometimes, card issuers will let you charge more than your
credit limit (in other words, they'll authorize a charge by
phone) and then charge you a fee because you exceeded your
limit. It's up to you to be aware of how much credit you
have left if you want to avoid the fee.
More next week.
For more information, contact your local
Colorado State University Extension office.
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