The Student News Site of Black River Falls High School

BRFHS Paw Print

The Student News Site of Black River Falls High School

BRFHS Paw Print

The Student News Site of Black River Falls High School

BRFHS Paw Print

Getting credit where credit is due: Credit card advice that will save your life

Discover, MasterCard and Visa are just a few credit card companies that offer deals to college students.

For seniors that will soon be entering the real world, there are a lot of things to think about. Money will no doubt be a concern for the majority of graduating seniors, especially for the ones attending college. Credit cards can be a beneficial way for students to make purchases and learn about financial responsibility while building a respectable credit score.

But while credit cards have their benefits, they also demand attention and responsibility from their holder. Mismanaging a credit card can have a long-lasting negative impact on one’s life. Business Education teachers Megan Finch and Amy Yaeger as well as Family and Consumer Sciences Education teacher Sarah Halverson (who teaches Personal Finance) have some advice for students planning to obtain credit cards.

For starters, have only one credit card!
How many times have you seen someone whip out their wallet and have a stash of credit cards to pick from? For college students, this is a terrible idea. Multiple credit cards mean multiple monthly bills and unnecessary headaches. Keeping track of one credit card is plenty of responsibility for a college student.

Credit card companies take advantage of hungry college students!
College students are often starving and forced to wear dirty, scraggly clothes. Credit card companies capitalize on this by offering candy bars and t-shirts to students opening new card accounts. While you may think that having a credit card that you do not use cannot damage your credit score, this is not the case. The more credit cards you hold, the larger risk you are for making late payments. This can give you higher interest rates on future purchases.

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Halverson remembers two girls from college who made some bad choices with their credit cards.

“These girls signed up, got the cards, went on spring break, spent quite a bit and then got the bill,” said Halverson. 

The girls didn’t tell their parents, thinking the debt would just go away.

“The compounding interest and late fees were horrendous. They had no clue how long it would take to pay back a trip that they charged $1,000 for but then had interest and late fees that kept applying each month,” said Halverson.

The trip ended up not only being very expensive, but it also affected the girls’ credit scores in ways they didn’t realize.

“During college, they couldn’t sign a lease or get a student loan because their credit scores were so low,” said Halverson. 

Read the fine print. Pay attention to APR!
APR stands for Annual Percentage Rate. Divide APR by 12 to find how much interest you will pay each month. This number is used to calculate how much interest you owe if you do not pay off your balance on time. Say you purchase a $1,000 television with your credit card. Your APR is 24%. If you fail to pay off your $1,000 credit card bill within the first month, you now owe the credit card company 2% more than the $1,000. After one month, you now owe $1,020 for your $1,000 television. That 2% is added on each month until the balance is paid off. Also, pay attention to whether or not potential credit cards come with an annual fee or a minimum purchase amount.

Why does APR vary from person to person?
If you are a first-time credit card holder, your APR will be higher. This is because you have limited past experience for the credit card company to use in order to decide your risk to the company. Also, if you have a bad credit score, your APR will be higher.

Make your payments on time!
Here’s where a credit card can have lasting negative effects on your life. If you are consistently making late payments of the minimum required amount, your credit score will take a hit. Credit score is used for all major purchases. If you ever plan on buying a car, a house, a boat or even taking out a credit card with a reasonable APR, you are not going to want a bad credit score. With a bad credit score, you will most likely be denied the ability to take out a loan for these purchases. Also, a marriage is a legal obligation. Upon marriage, the debt of one spouse becomes the debt of both spouses. No one wants to enter a marriage knowing that they will acquire a $30,000 debt that they will never be able to repay, therefore damaging their own credit score. Know that not paying rent or utilities on time will appear on your credit report and lower your credit score. Every U.S. citizen is entitled to one free credit report per year from organizations such as

Take the steps to ensure on-time payment!
For first time cardholders, one way to safeguard from debt accumulation is to have an account with enough money in it to back up all credit card purchases. If you only have $200 in your bank account, do not make a $500 purchase and hope that the situation will work itself out! Also, backing up your purchases will teach you to not spend money faster than it comes in.

How does a credit card differ from a debit card?
Debit cards are like checks. You put money in a checking account, and the debit card allows you to withdraw those funds. The advantage of debit cards is that they allow you to spend only money that you already have. A disadvantage of debit cards is that if not monitored closely, it can be very easy to overdraw your checking account and overdraft fees will follow. If your debit card is lost or stolen and used by an unauthorized party, it is much more difficult to be reimbursed for the unauthorized purchases because the money has already been withdrawn from the account. Credit cards are like a tab at a restaurant. All purchases are added up, and at the end of the month you receive a bill. This is a very easy way to spend more than you can handle paying off. Credit cards carry more assurance. If your credit card is lost or stolen, you are only responsible for $50 of unauthorized purchases, a fee that is typically waived. Ever wonder what credit card companies do with the money they earn from interest? Part of that money is used to cover unauthorized purchases made with stolen cards. 

Things to always avoid!
The ability to make online purchases is just one of the conveniences that come along with credit cards. However, be very selective about what sites you disclose your information. On eBay, never give your card information directly to the seller. Always use PayPal with eBay to decrease your chances of becoming the victim of identity theft. Spelling errors on a website are a red flag that the operation may not be legitimate. If you are uneasy about the security of a website, follow your instinct. Sites that have an unprofessional look and do not include a security stamp or a privacy statement should never be given credit card information. If a site does not include contact information, do not order from that site!

If you follow this advice, your financial future will be bright!

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Getting credit where credit is due: Credit card advice that will save your life