Credit-card tips for college students

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Walk through any university plaza and you are bound to find tables full of freebies - T-shirts, hats, calculators and backpacks. So what's the catch? Nothing more than a signature on a credit application.

College students are the largest identifiable target for credit-card companies seeking first-time customers. In fact, according to a national survey conducted by the Nellie Mae Corporation, a firm specializing in college education finance, 78 percent of students said they had at least one credit card, while nearly 40 percent admitted they had three or more.

With an average credit card debt of $3,000, graduating students are adding to the current consumer trend of escalating debt. Students with little or no experience using a credit card may soon come to find that the freedom to spend can quickly turn into a financial chokehold. While they do hold risks, becoming credit savvy is a necessity for students on the brink of becoming self-sufficient adults.

The following tips can help you avoid credit pitfalls while helping to build a good credit history.

Read the fine print and understand what the responsibilities will be. Shop around for the lowest interest rate, and little or no annual fees.

Understand that credit cards are not free money and should be used as a tool of convenience, not an extension of your income. The charges will come due whether you have the money to pay for them or not.

Think long-term and use your credit cards to build a healthy credit history - one that includes on-time payments and reasonable balances.

Understand that a good credit history directly affects your success after graduation, since many companies use credit reports and scores as a financial measurement tool. Your credit score can influence a job prospect, insurance coverage, and approval for home or car loans.

Know your limits. Just because you have a $1,000 or $2,000 credit limit does not mean you can afford to carry that balance. Keep in mind that most minimum payments average about 4 percent of the total balance owed, meaning that in the end, you may pay much more for something than it originally cost.

Ask for help when needed. Don't wait until the minimum payment is out of reach. Contact the credit card issuer at the first sign of trouble; they may be able to assist with a reduced or waived payment.

Finally, even if an offer seems too good to pass up, exercise restraint. Each consumer should have no more than two to three lines of unsecured credit attached to their name. Making smart financial choices could be the difference between spending the money earned after graduation on things you want and need, and struggling to pay existing debt.