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Credit cards: Use responsibly

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John Rothwell | The Collegiate

By Kailey Coen – Collegiate Staff

College students are one of the biggest consumers of credit cards, and are victims of many credit card company marketing tools. They are a big responsibility and students should do their research before getting a credit card to ensure they don’t rack up debt and end up lowering their credit score.

Credit should be important to a college student for many different reasons. Credit is one thing that determines if you can get a loan. A high credit score allows someone to get a better interest rate for long term loans.

For students, college is a great time to start building credit. Starting early is beneficial, because it takes a while to build good credit. Establishing it early sets up well for the future. Damaging a credit score can take years to repair. Employers are also starting to use credit reports when looking at someone for a job because it shows their responsibility.

There are many different types of credit cards and whether a student should have one or not depends on the individual. If a student is considering applying for a credit card, they should make sure they are ready for the responsibility.

“If a student is not responsible enough for a credit card, it can be dangerous,” said Matt Cook, Assistant Vice President of Community Relations at Lake Michigan Credit Union. “It can enable you to spend money you may not have.”

When considering a credit card, students should evaluate the different types of cards available. Check for the interest rate on the card and the available credit on the card. Rewards cards are available in many retail stores. Cook said these credit cards are good for people who can pay the balance off every month.

Credit cards can have both positive and negative affects. One advantage that credit cards have is the chance to build credit.

“Having a credit card will put you in a habit of making monthly payments, which is a great skill,” Cook said.

Cook said credit cards provide a nice cushion to fall back on, in case of emergencies and money is needed immediately.

Negative effects of having a credit card can be high interest rates, meaning the cardholder is technically paying more to borrow the money.

Getting a credit card is simple for anyone 18 or older. Most of the time it is possible to apply for credit cards in banks and retail stores or online.

The most important thing is to research which card is the best choice. Once a person is approved for a credit card they should make sure to be aware of the limit on the cards. People using the card to build credit should use it for things that are already planned to be bought, then paid off right away Cook said. No one is charged interest if the card is paid before the end of each month. Interest is charged when you carry a balance from month to month.

Identity theft is always a concern when having a credit card. The financial institution does not make the consumer pay off the debt if money is spent during the theft. However, there is still a concern of personal information being stolen. It is important to discuss specific protection with the financial institution.

To avoid identity theft, make a point to actively monitor the account. Never give card information or the pin number to anyone. Lastly do not store card information on any online websites Cook said.

He went on to explain that for students, it is important to know how to manage credit. The best way to manage credit is to make payments on time, be responsible and wise with money, and only take out loans when needed, limiting your debt.

“The biggest thing about credit cards is that it depends on the person,” Cook said. “If used responsibly they can be one of the best ways to start and establish your credit.”

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