Advising college students on credit card debt and good financial habits
ROANOKE, Va. (WDBJ) - In 2019, approximately 3.7 million students graduated high school and headed off to college. And while parents make sure they’ve got their books and dorm room essentials, when it comes to financial education, they’re ill-equipped.
“I would say majority aren’t prepared for making those decisions," Julie Wheeler, with the Better Business Bureau, said.
She added being prepared for college comes long before the acceptance letter. It’s important for high school and even middle school students to start saving now.
“If you get a job, make a commitment to yourself to put a certain percentage of that into savings that you don’t ever touch," Wheeler said. "The earlier you start, the more you’re going to have down the road.”
Last year, an EVERFI report found that 36 percent of college students have more than $1,000 in consumer debt, so it’s vital that parents and students work together to create a budget and stick to it.
“It’s a good idea for parents to have access to the debit card, to help them be able to manage the use of those funds," Wheeler said. "To set a budget on the front end so students know how much they have to spend over a period of time.”
Next, take advantage of student discounts and shop around for good deals on textbooks.
“With everyone learning virtually, there are virtual options for many of these books," Wheeler advised. "And sometimes going directly to the manufacturer, sometimes you can save money on that.”
Wheeler said it’s never too early to start teaching kids good money habits. The earlier they learn, the more ingrained those habits will be when they’re off to college and making decisions on their own.
“If you wait until two weeks before they’re off to college, they’re probably not going to be prepared,” Wheeler said. "The earlier you can start helping them understand the ins and outs and implications of that in their high school years so that they’re prepared and kind of know the ropes. "
It’s no secret credit card companies love to target college students as their consumer base.
According to a TrueCredit.com report, 1 in 4 students graduate with at least $5,000 dollars of debt and 1 in 10 graduate with more than $10,000.
“When you go to college, it’s pretty much the first time you’ve been on your own and it is a time of risk for students.”
One of the biggest risks is is of accumulating thousands of dollars of consumer debt before you even have a job to pay it off.
“They’re probably being contacted to get credit cards and put other credit in place," Wheeler said.
While college is a good time to start building credit, it’s also the age when many people are most impulsive.
“If they have a credit card for emergencies, make sure they use it just for emergencies and not because that pair of shoes they see they just have to have. That doesn’t constitute an emergency," Wheeler said.
Choosing the credit card is also important because there are many types of cards out there.
“The biggest things to pay attention to are, is there an annual fee to have the card?” Wheeler said. "What are their late fees should you miss a payment? And do they provide a limit for you and help you manage that?
Wheeler also talked about making sure that you regularly check your debit and credit card balance for any fraudulent charges and make sure you know how to put a freeze on your card if it gets misplaced or stolen.
No matter how old you are, the advice is the same: use the credit card sparingly and don’t miss a payment.
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