Credit Cards

Credit cards could likely pose the number one "debt threat" to college students today. According to a 2008 survey conducted by Sallie Mae, 84 percent of undergraduates have at least one credit card and the average debt is $3,173. This type of debt can follow you for years and limit your-and your family's-future.

If you must have a credit card, follow these steps to keep its use under control:

  • Have only one major credit card. Multiple cards mean multiple chances of landing in debt. Also, it's cheaper in the long run to pay a larger amount on one card than to make minimum payments on many.
  • Keep your credit limit low, preferably around $1,000. This will ensure you can't fall into debt too deeply. If the credit card company automatically raises your limit, call and have it reduced again.
  • Force yourself to read your statement. Make certain the charges are accurate and pay attention to the information about how long it will take to pay off the debt if you only make the minimum payment.
  • Shop around for a card that has no annual fee and a lower interest rate. You can shop for the best credit card deals on the Internet. Try the Bank Rate Monitor's site at If you belong to a credit union, find out what they offer. Credit unions often charge lower rates on their credit cards.
  • Use the card only for emergencies. (Emergencies don't include clothing or eating out.)
  • Make your payments on time. Even with credit card reform, if you're late with a payment, you'll face a hefty late payment fee-often around $35-and the credit card company may raise the interest rate you pay.
  • To avoid interest rate charges, pay off the entire balance each month.
  • Avoid getting a "cash advance" on the card. The interest rates for cash advances often are huge and the credit card company will begin charging interest immediately.
  • On every credit card purchase, remind yourself that you are taking out a loan. Ask yourself, "Would I really go to the bank and take out a loan to do this?"