Credit: A fact of life
BY JASON ASHLEY WRIGHT World Scene Writer
Monday, August 13, 2012
8/13/12 at 10:55 AM
"Credit cards aren't evil," said April Rosebure. "They do have their place."
Parents just have to teach their kids how to handle them, especially if those kids are college-bound freshman.
Several years ago, when looking through her child's university admittance packet, she found credit card applications.
"That was the first time I saw it, and I was appalled," said Rosebure, a credit counselor with Christian Credit Counseling Service, 6705 E. 81st St. The applications were mixed in with magazine subscriptions.
Before your kids leave for college - perhaps even by their sophomore year in high school - you should have a frank discussion about finances. With that in mind, Rosebure recently offered suggestions for avoiding financial woes before, during and after college.
The first tip she offered was for parents to be proactive in planning as far ahead as possible. Keep in mind every possible cost for attending college so you'll know what to expect.
The more you talk to other parents and students about costs, the more you can plan.
Learn how to budget
Consider opening a checking account for students by their sophomore or junior year in high school. Then walk them through how to balance it, Rosebure said. Teach how to keep track of receipts or to go online and do so.
Ask your bank about pre-paid cards your child can use. With those, parents can set parameters for when and where the card can be used, making it unavailable at certain merchants. This way, Mom and Dad can keep track of what and how Junior is spending.
Rosebure had a joint account with her kids so that she had permission to see what they were spending. When they reached a certain age, the account transferred to them.
As long as they lived with her, though, she needed to know they were being financially responsible, she said.
"The thing is to find out what works well for you and your family, and to set some accountability," Rosebure said.
Think before using cards
It's wise to be aware of costs coming ahead in college, but sometimes other expenses pop up - and that's where credit cards come in, Rosebure said.
Teach your children that using a credit card is the same as spending money, like writing a check only you don't have the cash flow, she said. Still, the bill will come.
Ask your kids to ask themselves, when they want to use the card, whether or not they'd buy the item if they had cash right then to pay for it now. That way, they're not equating it with free money.
When applying, Oklahoma Money Matters (OKMM), which is an initiative of the Oklahoma College Assistance Program and the Oklahoma State Regents for Higher Education, recommends choosing a credit card that doesn't charge an annual fee.
Also, pick one that offers a low, fixed interest rate, as well as provides a clear explanation of fees for late payments and courtesy services, such as cash advances and balance transfers, OKMM advised.
For more, including information on how to set up a budget and advice on student loans, check out tulsaworld.com/okmoneymatters, and click on "students."
Pick a school, know costs
"Most kids have a really good idea of where they're going," Rosebure said of students' college choices. They might just need to keep their options open.
For the 2009-10 academic year, annual prices for undergraduate tuition, room and board were estimated to be $12,804 at public institutions and $32,184 at private institutions, according to the National Center for Education Statistics.
So, plan now for students going to college in the next few years.
Most schools offer grants and scholarships, Rosebure said. Be willing to go to a different school that offers more grants and fewer loans.
Also keep in mind that the average freshman changes his or her major a few times by sophomore year, Rosebure said, meaning many college students take five years to finish instead of four - and that means more money.
"Is it worth the debt?" Rosebure advised students to ask themselves. If you get student loans, you'll be paying back for years, plus interest.
"It's not the end of the world if you find yourself with big student loans," Rosebure said. You just need to communicate with your lender to see what in-house payment programs are available.
Another way to save money is attending community college, where you can get basic courses and pre-requisites out of the way, Rosebure said. Those credits will transfer to other universities and, in the meantime, you'll have earned a degree from the community college.
Look for grants
Once you've picked a school, check out the school online and investigate both yearly costs and financial aid.
By the end of your sophomore year or start of your junior year in high school, go to the Free Application for Federal Student Aid web site ( tulsaworld.com/fafsa) to see what grants you have available. Often, you may not have to look for student loans.
And for some scholarships "all you have to do is write essays," Rosebure said.
Managing your credit card
The decisions you make today will affect your ability to get credit - and much more - in the future, reminded the Oklahoma Money Matters website (tulsaworld.com/okmoneymatters).
Lenders determine whether you are a good credit risk by checking your credit report.
Your credit report is compiled by three for-profit consumer reporting agencies that collect information on spending habits. Your credit score is determined based on this information.
It's important to have good credit because lenders use your credit score, employers check your credit to see if you're likely to be a responsible employee and landlords check your credit to see if you're likely to pay your rent. Plus, insurance companies check your credit to determine how risky you might be.
Developing a favorable credit history is one of the most important things you can do for your future. Here's how:
For more, check out tulsaworld.com/okmoneymatters
- Pay on time, every time. This is the biggest factor in determining your credit worthiness. Always pay on time and if something comes up, be sure to communicate with your lender.
- Keep your debt level low. Having too much debt will affect your credit score in a negative way. Don't max out your credit cards or borrow more than you can afford.
- Keep your available debt low. Even if you rarely use the credit that's available to you, lenders get nervous if you have a huge spending limit.
- Limit new credit. If you sign up for lots of new credit in a short period of time, lenders may think you're looking to spend money. Even if you're actually trying to save 10 percent, avoid opening new accounts unless you truly need them.
Save money on books
You can save money by looking
for textbooks online, said April
Rosebure, a credit counselor with
Christian Credit Counseling Service.
If you plan on going to the campus
bookstore, arrive there early
in case older, cheaper books are
Jason Ashley Wright 918-581-8483
Students wait in line for help with financial aid at the Tulsa Community College metro campus in downtown Tulsa. Tulsa World file
Students and their parents bustle in and out of Twin South dormitory at the University of Tulsa campus prior to the start of a semester. TU students begin class Aug. 20. Tulsa World file