Courtesy of Independent Community Bankers of America
As the nation’s college students head back to school, and with a growing number of them planning to use credit cards during the school year, the Independent Community Bankers of America and Bank of American Fork want to encourage students to be responsible when using their credit cards so they can maintain their finances and establish solid credit.
“The fact is that no one may ever need to see your transcript after you leave school, but your credit report will be with you for the rest of your life,” said Sal Marranca, past ICBA chairman and president and CEO of Cattaraugus County Bank in Little Valley, N.Y. “Community bankers want to be sure that students learn how to use consumer credit wisely so that they establish good credit and build a foundation that will serve them well when they are ready to buy a car or a home or pursue their dreams of owning a small business.”
New rules governing credit cards aimed specifically at protecting students went into effect in 2010. Credit card companies are prohibited from issuing cards to anyone under the age of 18, and those under 21 need either an adult co-signer or proof of income. Educational institutions must disclose any agreements they have with credit card companies that market to students, and credit card companies may no longer entice students with free gifts. All other provisions in the Credit Card Accountability, Responsibility, and Disclosure Act that cover consumers—such as advance notice of changes, more time to make payments and terms that are easier to understand—apply to students as well.
Even with these safeguards, the best protection against getting deeply in debt is knowing the pitfalls and how to avoid them. We offer the following tips to help students use credit cards wisely:
• Set up and follow a budget that includes paying off a credit card balance. “Maxing out” or charging up to your card’s credit limit can make sticking to your budget more difficult.
• Remember that cash advances, unlike purchases, generally have finance charges that apply immediately.
• Pay on time, every time. Whenever possible, pay more than the minimum payment owed (for example, 150 percent of the minimum) to pay off the balance faster and save on finance charges.
• Keep records of your account number, expiration date and the phone number of your card issuer in a safe place.
• Keep your account information confidential.
• Never give out your credit card number, card verification number (which appears on or near the signature panel) or expiration date over the phone, unless you initiated the call and know who you’re dealing with.
• Elect to receive your statement information online. Many sites offer an alert for unusual transactions and reminders of when your bill is due.
• Consider making your credit card payment online to ensure it is received by the monthly due date.
• Routinely access your account information online to track your spending and to quickly identify fraudulent transactions. If you see a transaction that is not yours, notify your card issuer immediately.
• If there’s an error on your account, report it immediately by notifying your card issuer. Look for complete instructions on your monthly statement or your bank’s website and follow them carefully to protect your rights.
• Keep a copy of your sales receipts so you can compare what you bought with the charges on your bill.
• When making online transactions, be sure the site is secure. Don’t let others see you enter card information.
• Don’t lend your credit card to anyone, not even a friend. Ever.
• If you move, notify your card issuer immediately.
• If you encounter financial difficulties, contact your card issuer as soon as possible.
If students want to learn more about credit cards and how to manage their credit, they should talk to their local community bank. Community banks are common-sense lenders that provide credit cards as a valuable service to their customers.
To learn more about credit cards at Bank of American Fork visit our website or call 800-815-BANK.