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Youth & Money

Expert Do's And Don'ts For College Students Facing The Credit Card Deluge

Tuesday, August 19, 2003

CBS MarketWatch

In the past 5 years, Consolidated Credit Counseling Services, Inc.� has seen nearly a 40% increase in calls from people under 25 years old.

College students are the #1 target of banks issuing credit cards, with incentives like free t-shirts, movie tickets and shopping coupons, according to Howard Dvorkin, MBA, CPA president and founder of Consolidated Credit, a non-profit credit counseling agency. Some colleges have banned credit card operators from campus. Others invite them since the college gets a kick-back revenue from the card issuers.

The newest generation of adults isn't showing much promise in the area of financial responsibility. Bankruptcy filings for 18- to 25-year-olds hit a new high, numbering almost 150,000, a tenfold increase in just five years. "If you look at the numbers the under-25 group comprises the fastest-growing age range for bankruptcies," says Dvorkin. "Students can't face the consequences of huge credit card debt."

Only 15% of high school students ever attend a personal finance class. Consolidated offers these tips:

  • DO view credit as an investment in your future. Using credit wisely builds a good credit history, allowing you to get a job, a car, and a home.
  • DO review your bill promptly. This helps you pay on time and protects you from identity theft and unauthorized charges.
  • DO order your credit report. Your credit report is your financial report card. It needs to be accurate so you can apply for other loans such as a car or a condo.
  • DON'T apply for more credit cards if you have balances on others.
  • DON'T feel pressure to get a credit card if you don't want one. Say "no" to salespeople.
  • DON'T pay your bills late -- it affects your credit rating dramatically.
  • DON'T spend more than you can afford. A credit card is not play money; it's a loan with an obligation to repay.
  • DON'T ignore signs of trouble. If you pay only the minimum, pay late or use cash-advances for living expenses, you might be in the credit "danger zone."
  • DON'T give out your card number; be alert to identity thieves and scam artists.
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