Rising student credit card debt and a tough economy are creating a unique scenario on college campuses. Students not only face mounting expenses, but they must also deal with new credit card legislation that could impact how they pay for those expenses.
While we have heard from many consumer advocates on this topic, I thought it would be interesting to hear from someone within the industry itself (and also in the interest of fair and balanced reporting). To that end, I interviewed Anas Osman, Vice President of Acquisition at Discover Card. Anas offered five credit card tips for students heading back to campus.
What does Discover consider the top tips for managing student credit card debt?
- Pay all of your bills on time each month. By paying on time, you're showing the lender or creditor that you've got enough cash flow to cover your expenses. If you pay late and the creditor reports your late payment to the credit bureaus, it may damage your credit history, and lower your credit score.
- If possible, pay off your charges in full at the end of the month. Use your credit as it was intended: as a short-term loan. Become familiar with the payment terms of your credit card. If a larger expense like a car repair or holiday travel requires that you revolve a balance for a few months, set achievable goals to repay the debt as soon as your cash flow allows.
- Keep total charges well within your credit limit. Students should start building their credit history by using a credit card with a low credit limit. This can help them learn to use cards in a more controlled setting and, at the same time, start building their own credit histories.
- Take advantage of the useful tools credit card issuers offer. Today, Discover offers eight different types of reminders to help cardmembers stay on track, which can also be sent directly to their mobile devices.
- Contact the issuer if you're having trouble making a payment. There may be payment programs available that can help them get back on track.
Is there anything you would like to add?
At Discover, we feel it's very important to set students on a strong financial track when they first begin using a credit card. The Discover Student Card, with its responsible credit limits, unlimited cash rewards, complete fraud protection, and award-winning customer service is a great first choice for students. Plus, we provide students with the online tools and resources they need to spend smarter, manage their finances, and save more.
It's important for students to know that having a credit card requires financial responsibility. If students do not feel ready or able to manage a credit card account, there are other options available. For example, Discover also offers the Current Card, which is a debit card for young adults that help them track and manage their spending while ensuring their money is safe. Cardmembers cannot spend beyond the finite amount on the card and their transaction activity does not impact their credit history. With parental oversight, the Current Card is a good stepping-stone for learning how to use plastic responsibly.
I'm grateful that Anas shared these tips and commend Discover for helping to reverse the great tide of student credit card debt that has flooded our college campuses. It's refreshing to see a card issuer encourage students to use credit responsibly.
About the Author
Mike Killian is founder of Learning Credit and Debt Management. Mike has been writing about credit and debt management issues that are of importance to consumers for over 8 years. His articles have been referenced by various members of the media, including MSNBC and The Motley Fool. Mike has also offered debt elimination seminars to businesses and community colleges for many years.