The first few weeks of school, you will undoubtedly be plagued with a deluge of forms to be filled out. Some of the forms will be required for your classes, for your dorm room, or for financial aid. But most assuredly, some of them will be forms thrust at you by the local businesses, the local churches, and of course, no less than ten credit card companies urging you to sign up for their cards to receive a free shirt, pizza, or poster.
Don't be deceived, however, by the allure of a free pizza. Signing up for credit cards is not as free or as easy as you may think. Take it from me, a former freshman who found herself with fifteen credit cards and a several shirts she never wore, signing up for more than one or two credit cards is never a good idea, for a lot of different reasons.
Your Credit Score
Whether you know it or not, your credit score is affected every time you apply for new credit or open a new account. With every voluntary "hit" on your report, you lose points. The amount varies depending on the company doing the computation, but the loss is real. More importantly, when you go to apply for credit you need, like a car loan, an alternative student loan, or even a personal loan, the multiple hits on your score may be just enough to keep you from approval.
Credit Card Debt
You've heard it before, but it is true. Credit card debt is at an all time high in this country, while savings is at an all time low. Don't join the statistics. No matter how often you tell yourself you won't spend money you don't have, the allure of excess credit is more temptation than many Americans have been able to handle. If you apply for every credit card on campus, suddenly you will have an extensive credit line available to you. Each card may have a minimal credit line, but added together, you are suddenly able to buy any number of items, and therein lies the danger. Too much credit often equals too much temptation. Yes, you need one or two cards to establish your credit and to have in times of emergency. You do not need fifteen cards filling the pockets in your wallet, waiting to be pulled out to pay for a fancy dinner, a new purse, or the latest tech gadget.
So Many Fees, So Little Money
What the vendors may not tell you as you gladly sign their forms is that often student credit cards come with fees and bad interest rates. If you have very little credit or no credit at all, the credit card company takes some degree of risk in giving you your first line of unsecured credit. But to make up for part of the risk, you will often be assessed a membership fee, so that before you make even your first purchase, you owe the credit card company money. Even more troubling is that the late fees or over-the-limit fees are high. If you have lots of cards with lots of different balances, keeping up with the payment dates and the credit limits may be confusing. Before you know it, you may owe more in fees than purchases. To make matters worse, once the fees are added to your account, the total is added to your balance, so you pay interest on not just your purchases but on your fees as well.
As a student in college, it is always a good idea to think about your credit. Having a credit card is a good way to learn to use credit while also establishing a positive credit history. Just remember, once you have a card, there is no reason to apply for more. If you already have multiple cards, decide which ones offer the most benefits, and cancel the rest. And remember, the next time someone offers you a free shirt or poster or pizza, keep walking.
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