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8/16/2000

Shop Around Before You Sign Up to Charge It

Cheryl A. Thompson

Credit cards can help you spread the costs of tuition and textbooks over several months when funds run dry, but you should shop around for the card that best suits your needs and spending habits.
  • Read the brochures that arrive with the offers. "The costs and terms...can make a difference to how much you pay for the privilege of borrowing," notes the Federal Reserve Board in its pamphlet "Shop—The Card You Pick Can Save You Money." Available from the U.S. Consumer Information Center in Pueblo, Colo., the pamphlet explains the various terms that commonly appear in offers for credit cards. Students who expect to carry over a balance from one month to the next should learn the fine points of how the credit card companies calculate finance charges.
  • Remind yourself that every credit card transaction eventually comes out of your own pocket. "Know your limit!," warns MBNA America Bank, N.A., "This will help ensure you don't take on more debt than you can manage and will also leave you credit available for emergencies." MBNA, which ASHP uses for its credit card program, offers "Money Matters for Students," an interactive Web site that includes information on choosing a credit card. The site also has a worksheet that students can use to plan a budget for each semester.
  • Don't confuse a credit card with a debit card. "Unless you activate an overdraft line of credit [for the debit card], it's your money you're using," says another publication available from the U.S. Consumer Information Center. "Debit Cards—What Savvy Consumers Need to Know," explains the basics of credit, debit, and automated-teller-machine cards.

About one in five students with a credit card has used it to pay for tuition and fees, according to a survey conducted in 1998 for The Institute for Higher Education Policy and The Education Resources Institute. All in all, the findings suggest that most college students use their credit cards responsibly.