According to research on credit card acquisition, 70-75% of college students possess at least one credit card and many have debts that exceed $2000. In fact, 72% of students’ credit cards tend to be acquired through direct solicitation that includes direct mail, store offers, on-campus solicitations, and telemarketing.
Take control of your credit card acquisition and credit card spending. Here are 10 top credit card survival tips:
- The only way to get out of debt is to stop charging
- Always pay more than the minimum
- Pay off the credit card with highest interest first, then go on to next highest, and so on
- Consider a debit card instead of a credit card
- Negotiate a lower interest rate (i.e. APR)
- Request a low credit limit
- Keep credit card balances below 35% to improve credit scores
- Review and shift your spending habits.
- Talk about money management with someone you trust and respect
- Stop direct credit card mail offers by calling 888.5.OPTOUT or registering online at www.optoutprescreen.com
STUDENT LOANS VS. CREDIT CARDS
Students have shared that the number one reason why they rather use a credit card versus a student loan to pay for their education is – fear of student loans. Students don’t borrow student loans because they don’t understand how they work and are afraid to get into too much debt. Ironically, students would rather use a credit card, which is also a loan, a very expensive loan. Credit cards would make sense – you charge it and you pay the balance at the end of the month.
When weighing whether to use a Stafford student loan or a credit card to pay for your educational expenses, you may be surprised to know that Stafford loans are more advantageous than a credit card (see chart). Stafford loans have a fixed-low interest rate (unlike credit cards at 15-29%), offer many repayment options and deferments to suit your needs. And if you plan accordingly, your first Stafford loan payment may not be due until years from now!
STAFFORD LOANS |
CREDIT CARDS |
Federally regulated |
Company regulated |
Rate capped at 8.25% (Currently, subsidized loan is 6.0%) |
Rate not capped - usually 16-21% |
First payment due possibly years from now |
First payment due next month |
Most 1-2% origination fee |
Most have annual fees (some based on current balance) |
Have deferment/forbearance options |
No options! |
Complete the Free Application for Federal Student Aid (FAFSA) |
May check credit history for credit worthiness |