Helping Students Manage Credit Cards
Institutions can help their students manage credit cards by following Nelnet’s four tips
Helping students identify their financial needs vs. wants to eliminate credit card debt
Making students aware of the responsibility that comes with owning a credit card
Credit card tips
Swiping a credit card throughout the day is convenient and common. Credit cards are an efficient way to pay for things, but they could get your students in trouble when the swiping becomes excessive with no money to support this behavior. Nelnet is devoted to student financial wellness and provides nine essential tips to follow when managing a credit card. Four of those tips are:
- Balancing wants vs. needs
- Limit the number of cards you have
- Shop around
- Pay off your balance each moth
Balancing wants vs. needs
Your students may have a hard time deciding what they need versus what they want. They need their next meal, they want the ticket to the concert. Living within their means will be important while having a credit card because inappropriate spending will result in debt. Being able to be okay with the less expensive option or not needing to purchase the latest fashion trends will benefit students in the long term. Further tips to provide to your students to help them identify their wants and needs can be found from this article. The article lays out simple ways to manage money as a student. It brings awareness to spending that can add up. For example, buying a gourmet coffee and muffin every day for a week can add up to $50. This makes students aware that time management trumps convenience when it comes to their finances.
Another tip for students to keep in mind is being hesitant to pay tuition using a credit card. Nelnet has a blog that warns students about putting large amounts on their credit cards because of the interest that piles up over time. A better option for paying tuition are private education loans, which have much lower interest rates.
Limiting the number of cards you have
A student’s credit score will decrease if they apply for multiple credit cards at once. At the same time, closing multiple credit cards at once can also hurt their credit score. One credit card is more than enough for students, keeping in mind everything else they are already balancing in their lives. There is no need to add extra headaches by adding multiple credit cards. Let us keep in mind that most college students are extremely busy though, resulting in not having time or energy to manage multiple cards.
Taking the extra time to read the fine print is important so there are no surprises three months down the road. Finding a credit card with a low interest rate is ideal. Credit cards are often offered from companies that your students may already be spending money at. For example, purchasing a single store credit card can also help students rack up points that turn into freebies at a store, while building a good credit score. If your students like to travel, suggest getting a credit card that has free flying points attached to it. Each student has unique needs and wants. This article highlights four easy steps to ensure your students identify the credit card that will provide them with the most value.
Paying off the balance each month
After obtaining a credit card, students will have the responsibility of paying off the bill every month. Students that can avoid late payments are going to be in good shape. Students should avoid these four credit card mistakes:
- Pretending credit doesn’t exist
- Missing payments
- Running up credit card debt
- Not setting a budget
Students need to be able to make financial sacrifices and be committed to not letting a credit card balance get out of control. Doing these things will be beneficial to them now and when they graduate because they won’t be in debt. Their diligent attention to their budgeting and money management will assure no interest is being accumulated on their credit card balances.