Millions of people in the United States carry at least one credit card. And guess what? A large number of them are college students. This is becoming a popular trend as costs go up, and the number of students in college also increases. The question is: do college students need a credit card? This all depends on who you talk to.

Generally speaking, you should never obtain a credit card until you are responsible enough to do so. If you are going to run up a huge bill, and then find out how to pay it later, a big mistake is in the works. And unfortunately, this is how many college students think.

Is there a time when a college student should have a credit card? There is nothing wrong with using a credit card for essential purchases such as books, food, and supplies. But as noted above, the student must be responsible enough to only use the card for these types of purchases.

Some college students can benefit from having a credit card. Others, those who are not responsible, are better off waiting until they graduate and land a full-time job.

Are you worried about overusing your credit card? Is this something you have done in the past? If so, there are ways you can avoid future problems. One of the easiest is to use your debit card instead of a credit card. Believe it or not, this can do wonders for your finances.

As you probably know, a debit card is connected to your checking account. Every time you make a purchase the proper amount is debited from your account. This is in contrast to a credit card in which you are borrowing money that you will eventually have to pay back, many times with interest tacked on top.

The main benefit of using a debit card instead of a credit card is that you are not going in debt. If you don’t have enough money in your checking account to make a purchase you simply do without for the time being. This may be a major change that you are not used to, but from a financial perspective it will go a long way in keeping you debt free.

By using your debit card instead of a credit card you can more easily manage your money while also staying out of debt. How does that sound to you?

Who would’ve thought that paying less interest on your credit card could be as simple as asking? I don’t know anyone who’s ever tried this, and I certainly haven’t, but according to Jeremy Vohwinkle at About’s Financial Planning site, paying less interest is often just a matter of requesting a lower rate.

We often forget that a credit card company actually wants our business, and any interest we pay, and will often accept a little bit less in interest payments rather than lose you completely as a customer. If you haven’t requested a rate drop before (or at least not recently), if you usually make your payments on time and especially if you tend to pay more than the minimum repayment, your chances of getting a rate reduction on your credit card are quite good.

If you ask the credit card company for a lower interest rate and they say no, you can also try the strategy of telling them you plan to do a balance transfer to another card company offering a lower rate. That might entice them to lower the rate then. And the best part is that you can’t really lose here - if they say no, that’s fine, you can try again in a few months, and it hasn’t cost you anything to ask. If they say yes you could save thousands of dollars in interest payments.

photo credit: Logan Antill

Obviously, the best place to start at building yourself a good credit rating is right at the beginning, and not waiting until debts start to mount up and you have to fix it. Here are some tips that young people should follow to ensure from the very start that they do the best to have a good credit rating:

• Open checking or savings accounts and maintain them well - no bounced checks - as these will prove you can handle money reliably.
• Apply for a credit card - but always pay the balance in full every month. If for some reason things get out of hand, always pay the minimum amount and wherever possible, pay more.
• Don’t apply for multiple credit cards or loan facilities at the same time. Wait at least six months in between applications.
• If you have a parent or sibling with a good credit rating, you can ask them to be added as a secondary card holder on their credit card account, and their good credit will reflect on you.
• Get your credit report annually to check for any errors on it, and always fix them immediately.
• Don’t close your credit card accounts even if you are not using them anymore - debt-free credit cards that you’ve had for a longer period show financial stability.
• Make all your payments for credit cards and loans on time. Late payments affect your rating badly.
• Increase your allowable credit but don’t use it - having a bigger credit limit (but lower debt) means you have a good debt-to-credit ratio which has a good affect on your credit rating.

Overdraft protection is a simple concept: If you incur charges to your bank account without having sufficient funds to cover that charge, your bank will temporarily “loan” you the difference for a flat, $25-35 fee. For many, though, overdraft protection is more hindrance, less help, as bank customers get slammed with multiple fees.

Many banks have the policy that larger transactions get debited first. Therefore, if you have $100 in your account, and charge $10, $10, $150, your $150 transaction will be debited first, incurring you three $35 dollar fees instead of one, despite the chronological order of your transactions. Given this scenario, many believe that this bank “service” is anything but, hurting those who can least afford it.

Nevertheless, incurring any overdraft fee is a poor financial practice. Basic skills, like knowing how to balance a checkbook, will help anyone prevent spending more than he or she earns. Simply put, expenses should not exceed income, and overdraft fees will not occur.

Banks, on the other hand, claim that overdraft protection is a valuable service meant to help. “We process checks and other debits starting with the largest amount. That way, important, large bills such as mortgages, rent and car payments will be paid first,” spokesman for Chase bank, Tomy Kelly, said.

Overdraft protection, depending on your side of the bank statement, can be a very positive, helpful service. However, many have expressed their desire for it to be opt-in, so that those customers who prefer for checks to bounce, will be able to elect that option.

photo credit: Logan Antill

You’ve seen the commercials and can probably sing along to the catchy theme songs - free credit reports are widely available, and everyone seems to want to get your yours. But buyer beware, many of the free credit report websites and companies actually charge for their services, merely luring you in with one, free credit report.
To sign up for many of these sites, you’ll need to provide your credit card. Read the fine print, because in most cases, your credit card will be charged for monthly site subscription fees, which will generally monitor your credit report and let you know of any activity.
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photo credit: orphanjones

The average American receives credit offers monthly, and you’re likely no exception. But choosing your next credit card is not a decision to be taken lightly, especially with lots hidden charges and fees hiding among those offers. So review this list to determine if a credit card offer is a rip-off:

• A low APR: The typical APR — annual percentage rate — is 11.32%. If you have a credit score of 720 or higher, you deserve an APR of under 10%. If cards offer you higher rates, throw the offer away: it’s a rip-off.
• Annual Fees: You shouldn’t have to pay for using a credit card — that’s what interest is for — so unless you’re opening an airline or cashback card, say no to annual fees.
• Check out penalties: Interest rates can shoot through the roof if you go over your limit (30% or higher), so double and triple-check what a card’s penalty will be. You’ll find the penalty rate in the Schumer Box.
• High loan rates: A good credit card will offer you an average of 21.65% interest on a cash advance, plus a 2-4% fee. This already feels like robbery, so if a card charges more, run for the hills.
• Shady finance charges: FInance charges should be based on your average daily rate or average daily balance.

photo credit: TheTruthAboutMortgage.com

Being in serious debt thanks to your credit cards is a serious problem - but it’s one that you can get support for. Organizations such as Debtors Anonymous or simply groups that come together to meet in churches or cafes can really help you to feel that you’re not alone with your problem, and inspire you to find solutions to break the debt cycle.

A recent Wall Street Journal article told the personal stories of several people who are now working on their debt problems after joining support groups. For example, they explained the story of a 26-year-old female accountant who had almost no money to her name despite earning $82,000 a year. It turned out that her problem was mostly in spending money on extras and luxury, like expensive clothes, or high-end fruit for her boyfriend to eat!

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photo credit: banoootah_qtr

Make a late payment on your mortgage and your credit card interest rate goes up–even though you’ve been making timely payments on the card. (more…)

credit: allygirl520

If you’ve got some heavy credit card debts, your key priority has to be to pay down some of your debt so that you can start getting financially on top of things again, and you can start planning for the future. A recent article at About.com had some great suggestions for ways you can find some money to start reducing your credit card bills: (more…)