Money Mistakes College Students Make
English, Tracey Robinson, Ebony
The No.1 money lesson college students MUST learn is this: Actions have consequences. Many students are maxing out those credit cards and racking up huge debt before graduation, and that can lead them to financial ruin if they aren't careful.
College, for many students, is a declaration of independence. For the first time, they are free to make choices without parents looking over their shoulders. While it can be exhilarating to have so much freedom, it can also spell disaster for many students who make mistakes when it comes to managing their money, leaving them drowning in debt. "In such an environment, money-management often becomes an issue," says Blythe Terrell, a financial expert for youngmoneycom. "Knowing how to avoid these problems is the key to beating them."
Learning to manage money wisely starts at home. Too often, parents don't sit down with children early enough to talk about credit, saving, budgets, interest and debt. Credit card companies are well aware of this and target college students with easy access to multiple credit cards. "The credit card people are jumping all over them," says Gordon Wadsworth, author of Cost-Effective College: Creative Ways to Pay for College and Stay Out of Debt. Companies sometimes sign students up on campus, offering no credit limits.
Although these deals may be tempting, they often trap college students into signing up for too many credit cards. Many students max the cards out and incur staggering debt before graduation. High interest rates and payment terms may make it difficult for students to maintain required monthly minimum payments.
Students, like other cardholders, must make monthly payments on time to avoid late charges, penalties and bad credit reports. According to the College Board, the average undergraduate student in 2005 had four credit cards, with balances totaling $2,000. …