Welcome to campus, college freshmen.
Back in the day, all those people staked out in front of the Student Union were pushing fraternities, or protest petitions or - depending on your era - T-shirts or Frisbees or water bottles or tie-dyes. Now those folks are stuffing credit card applications into the goodie bags of newbie students.
That's not so bad. Students who need to buy books, travel home for Thanksgiving and enjoy the occasional pizza and wings with friends can certainly use the flexibility that credit cards offer.
But those same students, unfamiliar with the hidden costs and credit traps that some cards carry, can get into financial trouble before they've gotten their first midterm grades.
And after a few years, in fact, the average new college graduate holds more than 6 credit cards and owes close to $3,000 on them, according to Credit.com, a credit education and marketing firm.
Even without any new charges, that's a debt that can take almost 3 years to pay off, if you've got a 19 percent interest rate and monthly minimum payments of $120 a month.
So it's good to use credit cards, but not to let them use you. There's some evidence, based on an annual survey by college debt financier Nellie Mae, that students are getting smarter about their use of credit. But they can always get even smarter.
Here are some tips for new students who are looking at all that shiny new plastic.
- Take the T-shirt, not the card.
Just because someone's standing at the college gate pushing plastic doesn't mean that's the best new card for you. An older study by the Public Interest Research Group found that students who got cards at those tables set up on campus had more debts than students who got cards other ways.
Compare the card offered by your campus credit union with your regular bank and other offers you can find online. Choose a card that has no annual fees, at least a 20-day grace period before interest is assessed, and a good introductory interest rate.
- Expect a better card than your older sibling had.
Student credit cards have improved. Fees have been tamped down and some even offer cash-back rewards. The Citi MTVu Visa Card, for example, offers rewards for good credit behavior, like paying on time.
- Talk to your parents before you sign.
Some parents prefer to handle the credit card bills at least for one year while their child focuses on school. But over time, it's good to be responsible for your own bills. If you get a regular allowance for school expenses, remember that it has to cover those card bills, too.
Several web sites do some version of Credit 101; the more you know the better you'll be at it. Check out youngmoney.com, which has a very good credit card payoff calculator. Other educational information is at nelliemae.com and credit.com.
It may help you to keep a credit card register, like a checkbook register, and write down everything you charge, so you know how much you owe. Only charge what you can comfortably pay off every month on the money your parents send you and the money you earn at your campus job; once you start paying interest and running a balance from month to month it can be very hard to catch up.
- Always pay your bill on time.
One day late and you can end up paying a $35 late fee and getting a black mark on your credit score. And when you're just starting to have your own financial life, you don't have a long enough history to be able to afford that black mark. When you graduate, potential employers and landlords are likely to check your credit file.
- Skip the store cards.
Getting 10 percent off that pair of jeans really isn't worth taking on a whole new card, and most retailer-sponsored credit cards carry high rates. Stick to one card with a low and manageable credit limit, say $500, until you are comfortable with your credit knowledge and bill-paying ability.
- Worry a bit about identity theft.
College students are often victims, says Credit.com's Adam Levin, so check your credit report regularly to make sure nobody else is pretending to be you and running up charges you don't know about.
Go to annualcreditreport.com for really free credit reports. There are three credit reporting agencies. Each is required to give you one credit report a year free through this site. You could spread them out and order one every four months just to make sure there are no mistakes or unrecognizable accounts in your file.