Paying with Mr. Plastic 

Student credit cards offer convenience, but at a price

The financial difficulties of college are hard enough without the responsibility of having a credit card. So, are the too-good-to-be-true credit card offers aimed at college students really worth it?

Credit cards are more convenient than writing a check, and they are a good way to begin establishing a credit history. Most introductory offers aimed at students, however, have high interest rates, stiff penalties, and a low spending limit. For the student who's just starting out, a credit card may not offer much more than a standard checking account.

Here's a quick look at what one credit card company is offering compared to the old-fashioned checking account.

One online offer from Discover is aimed at college students with an introductory APR (Annual Percentage Rate) of 17.99 percent. But let's look a little more closely: If you miss a payment, your APR goes up to 19.99 percent. And if you use your credit card for a cash advance, you must pay a 22.99 percent surcharge on the advance. Even if you make your payments on time, your APR can still change on a monthly basis. In addition, you must pay penalty fees -- most cards' fees range from $15 to $30 -- if you exceed your credit limit or are late making a payment.

So let's say that you finally buy that $150 pair of shoes you've always wanted, but you've never actually had the money for. If you use your credit card to buy the shoes today, and wait a month to pay the bill, you will actually owe $176.99 for a $150 pair of shoes. But if you don't have the cash when the bill comes, you then owe the original $176.99 plus a $15 late fee, and your APR shoots up to nearly 20 percent, a hefty price for that impulse buy.

Wells Fargo, one of the biggest banks in the country, offers a good alternative to a credit card: an ATM/Debit card that's tied directly into your checking account. Because Wells Fargo is so big, it would be hard to find someplace that wouldn't take your ATM card. And the debit card is also associated with Visa, so it's just as convenient as a credit card.

But unlike a credit card, the debit card is tied directly to your checking account, so you can't spend money that you don't actually have. You don't have to pay extra fees on any of your purchases, and you never have to worry about paying a bill.

This may not be as exciting as having a bigger spending limit with a credit card, but do you really want to be spending money that you don't have?

There's nothing wrong with a credit card, as long as you know you can be responsible with your money. But if you just need access to your savings account as you struggle with the financial burden of college, getting a debit card attached to your checking account might be the simplest solution.


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