Credit Cards

Ashlee Macchi

03.06.09 9:33am

I can completely agree with that!  It is shocking how fast a credit card balance can increase in such little time.  I never thought that those small purchases of $5-$10 could add up so fast; in the end I find that its those that make the balance on my card sky rocket.  One of my first credit cards was an Alaska Air Miles card, so using it, in my mind I would give myself an excuse to use it " I am getting air miles."  Come to find out, that wasnt the best excuse...it still left me with a large credit card balance that I am  now trying to pay off before the grace period of no interest goes away!  In my opinion I think credit cards should be used for small purchases, but make sure you pay it off at the end of each month, so your not stuck with a large interest bearing balance!

Julia and Danny

03.06.09 2:42pm

I think getting a credit card at 19 was one of the biggest mistakes I ever made!  I had absolutely NO concept of paying it back or how NOT paying it back would affect me in the long-run.  I call it the young-and-stupid syndrome, afflicts many people under the age of 20.  Hehehe!  But in all seriousness, I did not have any kind of financial advice or knowledge and was not prepared to be in charge of $500 of credit as I too managed to turn that $500 of credit into $500 of worthless junk + $500 of overlimit/late fees.  Ever since then I have been "blacklisted" by a certain card company and still can not get credit with them to this day!  I advise anybody and everybody to meet with some sort of financial counselor or advisor before getting a credit card of any kind, either at your bank or insurance provider.  Just SOMEBODY that knows more about money than you so they can give you a realistic picture of what this little piece of plastic can and can NOT do for you.  And if you're a young college student out on your own and think you can handle a credit card, PLEASE PLEASE PLEASE do not put it in your wallet!  It's so tempting!!  I recommend getting a safe deposit box or something like that and leaving it there so you have it for emergencies but not the everyday necessities that should be paid for using cash/debit, i.e. ACTUAL money, not pretend money!  Can you tell I've been burned by credit cards?  Because I have.  :)

~Julia

Peg Dyer

03.07.09 5:01pm

With the focus on credit these days and more and more banks that are having difficulties, it's time to start taking a hard look at the credit cards you currently have. Many people are being effected by rising interest rates and additional fees. Even people with steller credit have had rates increased to as high as 24%!

When you receive you credit card statement make sure you are checking the finance charge. Most cards will charge you a certain rate for purchases and another rate for cash advances which normally, is always higher. Plus they can impose fees for the cash advances averaging around 3%. So keep this in mind if you are tempted to use your credit card at the ATM or use it for balance transfers. Most balance transfers are considered a cash advance.

Balance transfers can be very attractive especially when they are offered at a 0% rate for a period of time. Be aware, because more often than not, there is usually an additional fee imposed as these transfers can be considered as a cash advance. Additionally, if your payment is received even one day late, the 0% offer will be void and the interest rate could sky-rocket to as high as 30% or more. So again, be sure to read the fine print on these offers.

Consider where your credit card is being serviced. Is it at a bank in New York or anywhere back east? If you mail your payment make sure that you are sending it in plenty of time before the due date. Late payments can greatly effect your interest rate, on any type of balance.

Monitor how your payment is applied to you balance. Some companies will apply your payment to the purchase balance first, then to the cash advance balance causing more interest to accrue on the cash advance balance.

So check the fine print on your statements and credit card offers. What might seem to be a great deal for awhile could be full of hidden surprises down the road that usually ends up costing you more in the long-run.

First Tech offers a Visa card with a current interest rate as low as 6%, on purchases and cash advances. There is no additional fee for the cash advance and the accounts are serviced locally. They also offer the convenience of online banking or auto pay giving you peace of mind that your payments will be applied timely. And as far as the fine print...very little!

Erin

03.07.09 8:26pm

I definitely agree with the above posts.  I think that there is something wrong with how credit cards are marketed, especially to youth.  When I was in undergraduate school, you couldn't enter the Union on my campus without being bombarded by people marketing credit cards.  You would get a free T-shirt or frisbee or something for signing up and BOOM!  Before you knew it, you had "free money". Back in the day, I used my first card for totally frivolous items.  That card was thankfully paid off long ago, but obviously I still struggle with using credit wisely. We live in an instant gratification world.  I try to resist the urge to use credit constantly.  I haven't used my cards for a month or two and that feels good.  I can't wait to be debt free!

Ryan_FEO

03.26.09 3:25pm

Erin you’re not the first college student to be lured by the appeal of ‘free money’ by way of credit card.  Some schools even sell the names of their students to credit card companies, and the influx of credit card offers roll into the students’ mail boxes.  Many times the rates and limits are higher for these “student cards” than what is responsible for lending.  If it’s not a T-Shirt, these days it might be airline miles, an iPod nano, store discounts, etc.  Just know that those perks usually come with a price by way of annual fees or higher interest rates.

Lucky, some institutions of higher learning have pushed the direct marketing, like you experienced Erin, off campus.  Some schools even recognize the importance of credit education.  Last year First Tech provided an educational workshop titled “Being young and credit smart” at each session of the University of Oregon’s IntroDUCKtion student orientation.  The workshop covered topics such as; how to use credit wisely, understanding the impact and cost of credit, how interest rates affect us, keeping credit records clean, and more.  Parents and students came to listen and ask questions.  We were proud to have been able to provide this educational workshop to incoming freshmen and transfer students. 

For some students this was the first time they were exposed to personal finance information in a classroom-like setting.  While steps are being taken in the Oregon state government to add a financial literacy element to high school diploma requirements, that initiative may be a few years off from hitting the books.  Nationwide, only 3 states have graduation requirements that include stand-alone financial literacy courses for the class of 2010.