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Avoiding College Credit Card Traps
James H. Dimmitt -- Using a credit card is a big responsibility whether you're a college student or an adult. Managing your credit wisely establishes a positive credit history which will serve you now and well into the future.

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Congratulations, college freshman! You're about to embark on one of the most exciting times of your life.

By now your parents, siblings, and friends have offered you all kinds of advice on how to make your transition to college smoother -- how to get along with your roommate, what classes to take and which ones to avoid, where to find the best off-campus food, and how to stay safe on campus.

One thing they may have not warned you about is how quickly you'll be bombarded with credit card offers. You'll find them in your textbooks, in your mailbox, and on every campus bulletin board. You'll be offered free DVDs, t-shirts, music downloads, and more in return for completing an application for credit.

Why all this fuss over you for a stupid piece of plastic? Because credit card companies love to recruit new borrowers, especially in your age bracket. They know, from numerous studies, that college students tend to be impulse buyers. And even though your impulse purchases tend to be small -- pizza, coffee, beer, CDs, cigarettes, books, etc. -- those small purchases can add up quickly.

54% of freshman students and 92% of sophomores have at least one credit card. A recent study shows the average college student graduates with between $1,500 - $3,000 in credit card debt.

Here are seven tips to help you manage your college credit card needs:

1) Look for a card with the lowest fixed percentage rate and a low or no annual fee. Read the fine print carefully -- many low or 0% introductory rate offers expire in 6-12 months.

2) NEVER use your credit card for a cash advance. The fees and repayment structure associated with a cash advance are outrageous.

3) Have a budget! Your credit card is not free money. Budget your money so that you can pay off your balance at the end of each month. If you can't pay off the balance, always make more than just the minimum payment.

4) Pay your bills on time, otherwise you'll pay a late fee between $25-40 every time you're late with a payment. Late payments will also increase your chances of having your percentage rate raised on ALL your credit accounts.

5) Request a low credit limit somewhere between $700-$1,500. The object is to have credit available to meet some of your expenses and in cases of an emergency.

6) Less is better. You don't need more than one or two cards at the most. The more you have the more tempted you'll be to use them or to "max" them out.

7) Consider using a debit card instead. A debit card is linked to your checking account and purchases are automatically deducted from your account balance. Of course, make sure you have money in your account to cover any purchases you make.

Using a credit card is a big responsibility whether you're a college student or an adult. Managing your credit wisely establishes a positive credit history which will serve you now and well into the future.

James is editor of "To Your Credit," a free weekly newsletter with tips to help you manage your personal finances. Subscribe today and receive his ebook Identity Theft -- How To Avoid Becoming the Next Victim! and other free bonuses by visiting http://www.yourfreecreditreportnow.com.

© 2005 James Dimmitt

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The views and opinions expressed in these articles do not necessarily reflect those of College Central Network, Inc. or its affiliates. Reference to any company, organization, product, or service does not constitute endorsement by College Central Network, Inc., its affiliates or associated companies. The information provided is not intended to replace the advice or guidance of your legal or medical professional.

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