Jordan Goodman is the author of Everyone's Money Book, available at 888-201-6300. This is the third edition of the book. You can also visit his Web site at www.moneyanswers.com. He talks with us on Thursday mornings.

September 4, 2003

"Mounting College Debt Troubles"

The problem is not only the amount of debt, but the way the cards are foisted on the students. It is extremely easy to sign up for cards at sports events and at numerous locations around the campus. When you sign up for a card you get a T-shirt or baseball cap or phone card for $5, but many students don’t realize they may be getting on the road to a debt- and stressed-filled life for the price of a T-shirt. Most major colleges and universities have exclusive contracts with the big credit card issuers, like MBNA, Bank One and Citibank, to offer a college-spirited card with the school logo and colors to students, staff and alumni. The colleges get millions of dollars in fees from the credit card issuers, and they don’t seem to care if their students graduate thousands of dollars in credit card debt, on top of their student loans. But just because they make it easy, doesn’t mean you should take the credit card companies up on their offer.

Here are a few tips for both students and parents to help control out-of-control debt habits:

1. Shop around for the best card for your needs and don’t just take the easiest card that is offered to you at the football game. Look at all the features of the card, like the annual fee, interest rate, grace period, late fees, etc. Don’t get sucked in by introductory offers of 0% for the first 6 months -- those months do go fast and then you are stuck with the debt at much higher rates. Look at a Web site like www.bankrate.com to compare what else is available, instead of the college-sponsored card.

2. Pay your bill on time so you don’t run up interest charges that then compound with late fees, over-limit fees,etc.

3. Cancel cards you don’t plan to use. If you have too much potential debt on your report, it hurts your credit score. Also monitor your credit report and score at a Web site like www.guardmycredit.com to make sure it is accurate.

4. Don’t expect your parents to continue to bail you out if you’ve charged too much. Some parents will help once or twice, but they quickly tire of bailing you out and may stop -- and then, your credit score sinks fast if you don’t have the income to pay the bills.

5. Consider using a debit card instead of a credit card. A debit card hits your checking account balance right away, so it makes it much harder to spend what you don’t have. Write down a simple budget so you know what income you will be making from part-time jobs and what you should expect to pay for everything from books to pizza.

For More Financial Tips From Jordan Goodman