USA Funds University Offers Credit-Card-Counseling Hints

Most students have access to credit cards, and credit-card use has increased during the last 10 years. As the season for holiday spending approaches, financial-aid administrators can help students avoid the potential pitfalls of credit-card misuse.

USA Funds^® University offers the following tips that financial-aid administrators can share with students when counseling them about credit-card use:

• Compare several credit-card offers to find the card that best suits your needs.
• Don’t be fooled by low introductory teaser rates. After the initial period, interest rates generally increase.
• Understand all terms and conditions before applying for any card.
• Talk to your parents or others whose financial counsel you trust to help you make an informed decision.
• If the terms and conditions aren’t equal to other offers, don’t choose a card simply based on its promotion of a specific sports team or school.
• Keep in mind that interest rates for cash advances usually are higher than the normal rate for credit-card purchases.
• Try to limit use to one credit card.
• Do not lend your credit cards to or share credit-card numbers with anyone.
• Decline offers for increased credit limits.
• Keep a record of purchases, account numbers and issuers’ contact information.
• Understand that credit cards are not free, and they are not similar to checking or savings accounts.
• Evaluate your wants and needs. Credit cards should be used only for items that are necessary.

The following are several ways that financial-aid administrators can communicate or incorporate credit-card counseling into current counseling methods or materials that may be offered by their offices around the holidays — and throughout the year.

Classes
Credit-card information can be a part of classes about finances or college life. Because the focus of college-life classes is to help students succeed in school, information about using credit cards wisely is appropriate. Certain math and finance courses include lessons about interest-rate calculations. These classes are a great opportunity to help students understand how credit-card interest rates are calculated.
 
Loan Counseling
Financial-aid administrators already may offer credit-card counseling during entrance- and exit-counseling sessions. This counseling would be an ideal opportunity to briefly discuss credit cards, their interest rates and how expensive they can become when balances aren’t paid in full each month.

Orientation
Financial-aid administrators could set aside time during orientation when students and parents are learning about financial aid and student billing. Anytime students and parents are hearing about finances is a good time to offer information about credit cards. The timing during orientation also is beneficial, as many companies are on campus early in the year promoting their cards.

Special Workshops
Information abounds on credit cards and using them wisely. Using any variety of material, financial-aid administrators could easily develop a short workshop for students. Some examples of items to cover include helping students choose and complete credit-card applications, calculating actual principal and interest payoff amounts if they don’t pay their balances in full each month, and informing students of other potential pitfalls of credit-card misuse. USA Funds’ financial-literacy program USA Funds Life Skills^® provides information about using credit cards. Contact your USA Funds debt-management consultant for more information about USA Funds Life Skills.

More information about advantages and disadvantages of credit cards for students, guidance for helping students select the right credit cards for their needs, and suggestions for ways to help students become wise credit-card users is available in the USA Funds online-learning course “Counseling Students About Credit Cards.” USA Funds’ online-learning courses offer a comprehensive online curriculum to help financial-aid professionals enhance their skills.

For more information about USA Funds’ online-learning courses, contact your USA Funds Services representative.