The Freshman 15. Maybe you’ve heard of it, maybe you’re even experiencing it. No, I’m not talking about the extra pounds most freshmen add on within their first semester of college after eating too much pizza. The battle of the bulge I’m referring to is in your wallet.
According to Nellie Mae, a leading student loan lender, 83 percent of college students own at least one credit card. And the numbers show that as each semester passes the likelihood of getting a credit card increases, and so does the debt.
It all starts very innocently; a free t-shirt here, a cool cup cozy there and before you know it you’ve got five credit cards and $2,500 in debt all before winter break. So, before you pile on a huge helping of plastic, you might want to count the cost because many student credit cards have high annual percentage rates that pack on pounds of debt.
Here are a few tips for avoiding the Freshman 15 no matter what semester you’re in:
The Beauty of Budgeting – Take time to create a monthly budget, make sure it’s realistic and include your monthly credit card payments. To avoid overextending yourself try to keep your monthly debt load between 10 – 15 percent of your monthly net income (after taxes).
For example, if your net income is $800 a month, your monthly credit card payments shouldn’t be more than $120.
Limit Your Limit – Did you know that you can tell your credit card company how much you want your credit limit to be? Well, sort of. Many credit card companies will "reward" a good payment history by increasing the amount of credit available to you.
As tempting as it might be to go out and buy a new leather jacket with the extra $500 credit increase, you might be better served by saying "thanks but no thanks." You don’t have to accept an increase especially if you know that you’ll have a problem paying it back over time.
Maximize Your Minimum – The minimum payment on your credit card statement is just that, the minimum that they’ll accept but it doesn’t mean that’s all you should pay.
Just sticking to minimum payments it would take you more than 12 years and $1,115 in interest to pay off a $1,000 balance on a card with an 18 percent annual rate. So even if it’s just an extra $5 bucks, send it in and get that card paid off faster.
Be On Time Every Time – Whether you choose to make the minimum payment or pay more of the outstanding balance, your payment must reach the credit card company by the payment due date. Otherwise, it is considered a late payment and it could cost you as much as 15 percent of the minimum payment due.
If your account due date consistently falls at an inconvenient time of the month (like a week before payday) call your credit card company and ask if they can change your billing due date, most of them will allow you to make at least one change.
Keep In Touch – Don’t make the mistake of being "the strong silent type," girls might like it but credit card companies don’t. Call your credit card company right away if you can’t make a payment on your account for any reason. Most likely a special payment arrangement can be worked out while keeping your good credit history intact.
Also, if you change your address (move off campus or change dorms) call your credit card company immediately. Your payment could turn into a late payment in the time it takes for a statement to be forwarded to your new address. If possible, send your updated information before the change, not after.
Packing on the pounds is easy to do. Just remember it’s always easier to put them on than to take them off, so the next time you’re asked to fill out a credit card application, say "no thanks, I’m watching my weight."
Sanyika Calloway Boyce is the author of four books, she travels nationwide to educate, empower, entertain and enlighten students about money, credit and debt. This former debt-strapped college student shares real and relevant money messages that young adults can relate to and understand. Visit her online today at FinancialFitnessCoach.com.
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