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Credit cards a big temptation for incoming college students

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By Lindy Thackston

INDIANAPOLIS (Aug. 25, 2014) -- The fall semester begins this week for most Indiana colleges.

"I hope to make new friends, succeed academically and just have fun," said Charly Wolford, an IUPUI freshman.

"I think it’s going to be a great year and I’m ready to just get to  my major and get on to my new life," said Brandon Seitz, also an IUPUI freshman.

Chances are good you won't hear any students say they want to rack up debt.

But many freshmen will be faced for the first time with paying bills and living on a budget and those credit card offers can be very tempting.

"For the first time in their life they have 160 hours a week to do whatever they want with and no one knows what they're buying except themselves because they don’t live under their parents roof, so there's some natural temptations to not make the best decisions," said FOX59 financial expert Pete the Planner.

Pete says the best thing you can do is limit the card to one category. Decide what the card will be used for and stick to it.

"That way one doesn’t become two, two doesn't become three and before you know it, everything is going on the credit card and it can spin out of control."

He also says there is no reason for a student to have a limit above a few thousand dollars, and also no reason to get a card too young.

"I would never get a freshman one," said Pete the Planner. "It is a recipe for disaster. That should be reserved for, if anything, a junior and a senior."

What about bailing out your college student?

"No one wants to see a kid fall off a bike and get a scraped knee. Financially it’s the same thing. Your kids are going to make mistakes and they need to feel the impact of those financial mistakes so the worst thing a parent can do is wipe the slate and give them a free do-over."

The Better Business Bureau Serving Central Indiana offers these tips:

  • Create a budget for each month based on how much money is needed each month. Also, think about the best way to pay for these expenses.
  • Decide what expenses the credit card will be used for.
  • Do your homework by asking:
    • Are there annual fees or introductory rates?
    • What is the interest rate?
    • Does or can the interest rate change and why?
    • Is there overdraft protection and if so, does this affect the interest rate?
    • Are there any other fees that occur with the overdraft protection?
    • Are there any requirements or “conditions” to obtaining the credit card?  Such as: Opening a savings account with the provider?
    • Are there any limitations on where or how the credit card can be used?
    • Evaluate where the credit card offer is coming from. Is it from your bank who offers regular credit cards or through a company who helps you apply for a credit card?
  • Use caution if the company charges a fee to “learn more” or “apply” for the credit card.
  • Sometimes credit card issuers offer special deals for students’ first credit cards.  Ask your bank what options they may have for you!


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