Credit cards don’t have to intimidate

‘ ‘ ‘ No cash? Put it on credit! ‘ ‘ ‘ This sentiment is all too familiar to the average… ‘ ‘ ‘ No cash? Put it on credit! ‘ ‘ ‘ This sentiment is all too familiar to the average college student who, according to a recent statement by the American Financial Services Association Education Foundation, needs a lot more education before diving into the often dangerous world of plastic money. ‘ ‘ ‘ Pitt student Alexis Foster, for one, would’ve liked the advice years ago. Upon entering her freshman year, 23-year-old Foster signed up for four different credit cards, and it wasn’t long before she was wading through debt. ‘ ‘ ‘ ‘With the cost of books and living, it can be hard to always make payments on time. So if you go a couple of months past due, those interest rates compound, and you feel like you’re being swallowed by debt.’ ‘ ‘ ‘ Now, with the Association’s recently compiled list of six important factors to investigate, students may be less inclined to unwittingly fall into a credit card deal that could leave them high and dry … and broke. ‘ ‘ ‘ Included on the list are annual fee, annual percentage rate (APR for short), grace period, cash advance, credit limit and other miscellaneous fees. ‘ ‘ ‘ But for the uninformed consumer looking to trade in a wad of cash for a plastic card, even these six don’t mean much. ‘ ‘ ‘ ‘To be honest, I have absolutely no idea. I’ve never been told about anything but the dangers, never what to look for in a credit card,’ said Charley Murray, a credit card-less Pitt freshman. ‘ ‘ ‘ Katie Fricchione, another freshman, agreed. ‘ ‘ ‘ ‘I’m independent, I’m 18, but I don’t want to screw up my credit now for down the line when I’ll want to take out loans for grad school,’ she said. ‘I’d look for [a credit card] that’d give me good rewards and interest rates if I couldn’t pay my bill. But I wouldn’t feel comfortable going [to sign up] by myself.’ ‘ ‘ ‘ Thankfully, the Association wants to keep students out of the red, and knowing what terms to watch for can help. ‘ ‘ ‘ Let’s start from the beginning. ‘ ‘ ‘ A credit card’s annual fee is simply a membership fee paid once a year. Often, companies offer credit card deals that give people with good credit histories a card with no annual fee. As a cash-only student, however, you currently have no credit history, and so an annual fee will likely be in the cards. ‘ ‘ ‘ A card’s APR is often the downfall of the uneducated user, and it can go hand in hand with a card’s grace period. The APR decides the interest you’ll pay on your purchases for a certain length of time, whereas a grace period is an allowed free time between the time of purchase and when said purchase will be added to your balance. ‘ ‘ ‘ A bit confused? Many students are, but according to the Association’s Communication Manager Karen Klugh, the importance of understanding how your credit card works cannot be understated. ‘ ‘ ‘ ‘The biggest trap that students find themselves in is making impulsive decisions, signing up for spur of the moment deals based on a giveaway,’ said Klugh. ‘We suggest that you explore at least three offers and actually read all the disclosures and documentations. Know if there’s an annual fee, know what the rates are. You shouldn’t just make a split-second decision.’ ‘ ‘ ‘ Rounding out the Association’s top six factors are a card’s cash advance, or knowing the interest rate on money borrowed against your line of credit, and credit limit, which is simply the total amount of credit (or money) you can charge on the card. ‘ ‘ ‘ It’s important to be aware of any other fees that you may encounter for exceeding your credit limit or late payment. ‘ ‘ ‘ But even knowing what to look for doesn’t mean that it’s high time to get a credit card. For many students, a meal plan and a savings account are enough. ‘ ‘ ‘ ‘I think I’m responsible enough, but the debit card works for me right now,’ said Fricchione.