We’ve read about people getting into financial trouble from, among other things, spending too much on their credit cards or paying too much for a checking account. This is especially worrisome to college students and their parents.
Any time is a good time to think about spending and budgeting, but here are some strategies to consider when attending college for the first time. These strategies could end up saving you money in the long run.
Use credit cards judiciously. An obvious statement, but one which many ignore and find themselves in more debt than can be easily handled. It’s easy to pull out your credit card but always be aware that you will have to pay for that purchase sooner or later. A recently enacted federal law makes it mandatory for students under 21 to either have proof of income or have a co-signer to open a credit card account. If you co-sign for an account you will be responsible for paying any balance they are unable or unwilling to handle, so teach your students to stay within their ability to pay their bills.
Read the fine print on your credit cards, For example, will the interest rate increase if you make a late payment? If so, how much will it increase?
The University of Kentucky Federal Credit Union (UKFCU) offers a low interest rate credit card that keeps the same interest rate in spite of a late payment (although as with other banks and credit unions there is a late payment fee, so avoid that charge by paying on time). You can even design your own card. To find out more information click here.
Be careful with “student aid” debit cards. Some of these cards carry overdraft fees, reload charges, and fees for using debit cards with a PIN instead of signing for purchases. Some programs have limited ATM access, causing students to use outside ATMs, thereby racking up fees.
Some banks no longer offer a free checking account, or require a minimum balance or a certain number of debit card transactions to avoid a monthly service charge.
UKFCU has a branch right on the UK campus plus four other locations in the Lexington area, offers a free checking account with no minimum balance or other restrictions, offers the first box of basic checks free, and has no charges for using other institutions ATMs. Why not check into our Smart Checking account, or any of our other free checking accounts?