April 3, 2009, Newsletter Issue #113: Charging Can Lead to a Retreat
Tip of the Week
One of the worst traps young college students can fall into is using credit cards to pay their tuition. It may sound like a good idea if you don’t have the cash to pay your bill all at once, but it leads to long-term problems worse than the short-term ones it might fix.
Interest rates on most student credit cards are pretty high and putting large purchases on them can lead to very large minimum monthly payments. If you make a payment late you’ll get hit with a fee for that. Then your interest rates can go up, pushing you over your card limit and saddling you with a fee for that too. Before you know it you have a large amount of credit card debt with late fees, over the limit fees and rising interest rates.
You end up spending more than the tuition you charged, while building a mountain of bad credit. It is easy to say that you won’t ever miss a payment or send one in late, but it is even easier to have it happen to you.
Search for alternative means of college funding and build good credit at the same time. A declining credit score can only prevent you from getting loans you need in the future, while making you need them more than ever.
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