Watch Out for Falling Credit Cards

If it's your first year of school, you may be surprised at how much credit you can get. Credit card sign-up kits are everywhere you look. The card companies want to brand you early: you're worth thousands to them.

Credit cards are hard to resist, especially when your friends are signing up or the kids are the stands are giving out sign-up prizes.

But you have to watch that you don't add on big credit card totals to your student loan debt.

It's just too hard to keep from using a whole stack of cards. It's like trying to diet with a plate of brownies always sitting on the table. Credit card purchases can feel virtual, not real. The result is that you spend more impulsively than if you were handing over cash.

Even worse is that virtual money costs way more than cash if you can't pay off your whole credit card balance on time every month. And that can creep up on you pretty fast.

You figure you'll clear your balance next month, but then some new purchase pushes the balance higher, so you tell yourself you'll clear it the month after next. And once you fall behind (even by being busy and forgetting your payment deadlines) you find compounding high interest rates kicking apart your budget.

Aside from losing all that money to the card companies, you don't need extra stress when you're dealing with essay deadlines and exams.

Some first-year students actually max their cards to pay tuition fees. Before the term is out, they're getting a real-life economics lesson on the snowball effect of 20%-plus compounding interest.

So don't let the card companies suck you in with their sign-up prizes and reward points that cost more than they're worth. There are people who think they're cool because they have a wallet full of cards, but that's their problem.

You're busy with classes and friends and, probably, part-time jobs. Multiple cards make it easy to overspend and miss payment deadlines. As for the specialty cards (department stores, gas and so on, they usually have extra-high rates.

Walk away from the 'free' t-shirt. You're safest with a debit card and one basic credit card at the lowest rate you can negotiate. And if you've already been sucked in to extra credit cards, call to cancel your extra cards, cut them up and bin them.