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Credit Card Advice for Students

Young adults are being inundated with unsolicited credit card applications. Credit card companies are particularly anxious to have college students as customers. Put bluntly, they know that many students use their credit cards unwisely, get in debt over their means to pay and entreat their parents for financial help. Most parents don't want to see their children begin adulthood steeped in serious credit card debt and bad credit scores. Parents know, even if the kids don't, that a large debt with an interest rate of 25 percent can make later financial endeavors extremely difficult.

Not understanding or not caring about the concept of credit often gets students in trouble.

Whether you are entering or attending college or striking out on your own in the job market, you can use these tips to avoid credit card debt, keep your new credit score high and foil the attempts of credit card companies to trick you into spending more than you can afford.

Credit cards are loans-not free money

Not understanding or not caring about the concept of credit often gets students in trouble. It's important to think about how you're going to pay back your debt as you rack it up.

Before you apply for a card, make certain you read the application very carefully, including the fine print. If you don't understand any part of it, do some research online or call the card's customer service line directly.

Set rules for yourself as soon as you decide to apply for a credit card. How and when will the card be used? Depending on your monthly income, you might give yourself $20 to spend on frivolous shopping or activities every month, as long as you vow to pay off the bill in full before any interest accrues. Or, if your income is more limited, you might decide to use the card only to purchase textbooks or for emergencies only. Don't forget to define what "emergencies" are to you.

Your first credit card should have a low limit-something in the range of $300 to $500 should suffice. Consider this card to be a practical means in helping you establish a credit history. The low limit will help protect you from getting into debt.

When your first bill arrives, be sure to pay it on time. Your check ought to be mailed at least a week before the due date to allow for delays in the mail. If possible, pay your bill as soon as you receive it, and follow up to make sure your creditor gets it in time.

Never charge an amount on your card that's more than you're able to pay off in full. Paying the full balance of your credit card each month will save you hundreds of dollars that might have otherwise been wasted on interest.

Keep your credit cards to a minimum while you are young and struggling to make your way in the world. One card is probably enough. Avoid signing up for department store or "retail" cards. They are never a good deal, no matter what they offer to entice you.

Are you moving? Many young people move from place to place several times before settling down. Do not count on the post office's "Change of Address" form to get all of your mail to your new address. If a credit card bill goes missing and you forget about it, you will receive a black mark on your credit report for a missed payment.

If for some reason you are going to be late with a payment, call your credit card company as soon as possible. If you make the effort to do this, the company might not report your late payment to the credit reporting bureaus. You might even be granted an alternate payment arrangement, especially if you have already established a good credit history with them.

Put any disputes over billing errors in writing. When you think an error has been made, you don't have to pay that amount while the error is being investigated. Be sure to go ahead and pay any other parts of the credit card bill that are not in dispute, including any interest. When making a dispute, write to the credit card company at the address they list under "Billing Inquiries." You must lodge a dispute within 60 days of receiving the erroneous bill.

Never allow anyone to use your credit card, no matter how close they are to you. If that person cannot or does not pay the bill, it will be your name and your credit that suffers, as well as your relationship.

If your interest rate seems to be climbing and you don't like it, call the credit card company and see if you can negotiate it back down again. Interest rates can be negotiated, and often, if the credit card company does not want to lose your business, you can successfully get your rate lowered.

If you have fallen into credit card debt

If you're already dealing with credit card debt, the best advice you can receive is to pay off as much as you can each month. The minimum payment is not enough and paying that much will only land you in trouble later on. Pay as much as you can over the minimum balance-as you do, you'll see your debt gradually decrease.

If you have more than one card and have debts on each, attack the card with the highest interest rate first. Pay that one off as quickly as you can, and don't let yourself get into debt on it again. Cancel it if you have to, but know that canceling a credit card erases the credit history you have established on that card. If there are no annual fees attached to it, it might be better to just put it in a safe place and leave it alone.

When speaking of canceling a credit card, it's important to note that you cannot just cut up a card and consider it cancelled. You must call the credit card company. Many companies require that you cancel your account in writing. If you decide to cancel a card, make certain the credit card company notes that the "account was closed by the consumer" when sending the information to the credit reporting bureaus. This is important and makes it clear your account was not closed by the issuing company.

Credit counseling services

There are many credit counseling services out there, but if you're interested in using one, be careful. While some can be helpful, not all of them are honest. If you're not cautious, you may be ripped off.

Try your college first. Many colleges offer credit counseling services. If you don't attend college, you still might be able to get recommendations from college credit counseling services.

Check out any prospective credit counseling service on the Internet and through the Better Business Bureau. One way to determine if a credit counseling agency is reputable is by examining how open they are about their service and fees. Nothing should be hidden and most of their services should be free.

If a credit counseling service claims it can clean up your credit report quickly, be wary. This might be a fraudulent agency. Paying off credit card debt that has been honestly accumulated will take time.

Be a savvy credit card user

Credit card debt is out of control in America. Do your part to eliminate unnecessary debt by being a savvy credit card user. You do need to establish a credit history, but you don't need to pile up debt. Remember, you're supposed to be building your personal wealth, not the wealth of the credit card companies.

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