College Students
and Credit Cards

"Young people armed with an understanding of credit card basics before they head off to college are more likely to use these cards responsibly and less likely to find themselves overwhelmed by card debt," says the American Financial Services Association Education Foundation (AFSAEF).

"If parents haven't talked to their college-bound sons or daughters about credit cards yet, there's still time to do so," says Susie Irvine, AFSAEF's president and chief executive officer. "There needs to be a meeting of the minds about what the cards will (and won't) be used for and who's responsible for paying the monthly bills."

In addition, AFSAEF lists these five credit card fundamentals for college students to know:

• Not all cards are the same. Annual fees, for example, can range from nothing to $50 or more. Compare offers from at least three issuers and pick one whose terms best suit your needs. Base your selection on terms and costs, not giveaways.
  
  
• Account numbers should be protected at all costs. Don't give them out over the Internet or elsewhere unless you initiate the transaction. If your credit card becomes lost or stolen, contact your credit card issuer as soon as possible. Extra caution can help you avoid becoming an identity theft victim.
  
  
• Once you begin using a credit card, a credit report will be set up for you. Credit bureaus will add information to your file about any new accounts that you open and whether you're paying them on time. You can review your credit report for accuracy and encouraged to do so at least annually by contacting one or more of the nation's three major credit bureaus, which are Experian (experian.com), Equifax (equifax.org) and TransUnion (transunion.com).
  
  
• How you manage your credit cards in college will affect your future. What's in your credit report can determine whether other creditors will give you a loan to buy a house or a car, whether some companies will hire you and whether some landlords will rent you an apartment once you're out on your own.
  
  
• Credit cards aren't free money. They allow you to obtain and enjoy goods and services now and pay for them later. Attempting to use credit cards to live a lifestyle you can't afford is a sure way to get yourself in financial trouble. Don't borrow what you can't repay.

Founded in 1990 and based in Washington, D.C., AFSAEF develops consumer education materials and sponsors research on consumer finance issues. It is affiliated with the American Financial Services Association, a national trade association for market-funded financial services firms providing credit to consumers and small businesses.

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