You might have recently heard the term “the boomerang generation” thrown around – and it’s no joke. 85 percent of students graduating from college are going to head back home after they achieve their much-desired college degree with empty pockets, about 23000 dollars in loans and 4000 dollars of credit card debt. For college-goers who are interested in keeping their credit as clean as they can, try to follow these couple tips.
How to Keep it Clean
- Stay wary of promotions in the mail and know what you are getting. Credit card companies inundate students with hundreds of promotional, seemingly generous offers. These are mainly unsecured credit cards whose interests rates skyrocket after an initial few months. Don’t get pulled into the temptation to buy into them and live above your means – because it will come back to haunt you when the bills start piling up.
- Begin your credit journey with some training wheels as an “authorized user”. Never heard of the term? An “authorized user” basically piggy-backs off another persons credit card. You can sign up as one for your parents’ credit card and learn responsible habits with a little bit of parental guidance. Make sure your name and social security number will be put on the account so your transactions on the card will be shown and will go to your credit history. Of course, if your parents are not as responsible as you are with their credit cards, it might be best to go with the final option.
- And what might that be? Use a “secured” credit card from a local bank. A secured credit card is one that keeps back-up money in the bank for you. To give you an idea about how it works; say you get a secured credit card with a 600 dollar limit. The bank will keep 600 dollars in an account attached to the card that cannot be withdrawn from. This is “back-up” for you if, for any reason, you cannot pay your bill one month. Your limit to the card will then be the amount you have in the bank. Like any other credit card you will still get a monthly statement, but you have the back up as a kind of guard for your credit rating.
So make sure you get the credit card that is right for you and be wary of suspicious-looking offers that seem “too good to be true” – they probably have catches and tricks up their sleeves. So read all the fine print and do your research, because it is far easier to get into credit trouble than out of it.