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College students, credit cards: avoiding pitfalls

College provides students with many "firsts," but one that comes with some potential risks is easy access to credit cards.

"College kids are bombarded by credit card applications," says Lori Zierl, UW-Extension family living educator in Pierce County. "It's common to see tables set up with representatives from financial institutions at sporting events or other student gatherings."

The reason?

"Credit card companies make a lot of money from students--especially when students don't pay their bills in full. Late fees and interest payments can add up to hundreds of dollars a year," Zierl says.

There are many legitimate reasons for students to have their own credit cards, including ordering books online, paying for emergencies and building a good credit rating, Zierl adds.

"The best thing is for parents and students to talk about financial issues like using credit before the child goes to college," says Zierl. "Sometimes parents just assume that their college kids understand how to use credit, but frequently students who run into problems tell us that no one taught them about it. When students lack financial experience, they are especially vulnerable to accumulating more debt than they can afford to pay back."

Before your college student signs on the dotted line, Zierl offers some tips to avoid taking on too much debt.

  • Shop around for a card offering no annual fee and a low finance charge. Read the fine print. Most cards charge late payments, over-the-limit and cash advance fees.
  • Open an account with a low-credit limit; around $1,000 should be enough.
  • Limit it to one card. Managing multiple cards gets confusing and increases the likelihood of overspending and missing payment deadlines.
  • Avoid impulse shopping. Try to use your card only in case of emergencies. This usually doesn't include anything you can eat, drink or wear!
  • Charge only what you can afford to pay back. Track your spending and stick to a budget.
  • Pay your bills on time each month to keep finance charges and late fees to a minimum.
  • Pay the full amount each month to help build a good credit rating. If you can't pay the balance in full, pay as much as you can over the minimum due.
  • Use a debit card instead of a credit card. The money is deducted directly from your checking account so you can't spend more than you have.
  • Notify credit card companies promptly when you move so statements are delivered on time, avoiding extra fees and interest.

      What should students do if they find themselves in over their heads?

      "We recommend asking for help the first time you can't pay your bill in full," says Zierl. "Call your parents, or if you can't do that, meet with a financial aid counselor on campus to discuss your options."

      Zierl also suggests contacting your lender anytime you can't make a payment. Sometimes lenders will make special payment arrangements that will keep a good credit history intact.

      Zierl and her UW-Extension colleagues recently developed an educational CD-ROM and DVD titled "Are You Ready? The College Transition," available from the UW-Extension Learning Store at For information about upcoming classes in your area, contact Zierl at (715) 273-6781.