August is a big month for recent high school graduates to head off to college and start the next phase of their lives. But while the new experience of college brings the familiar stress of grades, it can also include a new worry: the credit score.
Even with newly-enacted financial reforms, college kids will still be tempted by credit. A huge chunk of the nation’s $850 billion in credit card debt is traced to young people lured by techonology and gadgets.
Several organizations are hoping to impart the importance of financial responsibility so that a 30-year-old isn't still paying off the pizza they ate in college.
Among them is Mint.com, which has taken to YouTube with a video that hopes to get the message of healthy finances out in a kid-friendly way.
With a "once upon a time" theme, the video tells the tale of a college student who spends too much. Later, the debt demon comes knocking, and it shows how financial responsibility is the only way out.
"When you’re young and you’re handed a credit card the world is your oyster," said Aaron Forth with Mint.Com
Consider this: a student carrying a $500 dollar balance with a 20 percent interest rate -- a rate not unheard of for this age group -- could wind up paying $100 dollars a year in interest alone.
Since building a strong credit history is so important, experts suggest you only pull out the card for money emergencies. Also, avoid fees, don’t miss payments from a late night of studying and read the fine print on rates.
"Don’t spend more than you can actually pull in, never going to get you in a good situation," said Forth.
Besides Mint.com there there are so many free financial websites to help, including the Federal Trade Commission. The FTC has also just enacted new rules to help protect consumers.
If you're in debt and go for help, agencies can only collect fees if they actually improve your situation.
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