Student Debt and Credit Education Blog

Having your credit card stolen can be a traumatic experience, but if you take action early you can prevent being the victim of a crime from hurting your credit and possibly costing you a lot of money.

As a preventative measure, you should periodically check your card statement for any unusual activity. Many credit cards use their own security measures and will contact you if, say, you live in Boston, but your card show a purchase made in Denver. But you shouldn’t count on that. Keep track of your own finances and confirm all of your purchases, even small ones.

Always report your stolen card immediately. All you have to do is call the bank and be sure to note the date and time when you noticed it was missing.  The company will put a block on the card preventing it from being used. If you report the card stolen on the issuer’s web site, print a copy of the confirmation.

If you are sure your card was stolen (as in, you were mugged), contact the police immediately. Get a copy of the report in case your identity is stolen as well.

Finally, contact the three major credit bureaus and report that your identity is stolen. Place a fraud alert on your file so that no new credit can be granted with your approval. The three bureaus you will need to contact are Equifax (1-800-525-6285), Experian (1-888-EXPERIAN) and Trans Union (1-800-680-7289).

When the matter is resolved, spend the next few months being very diligent about your credit. Monitor your card expenditures and bank accounts. If you see anything out of the ordinary, immediately contact your bank or the police.

Click here to review your credit score and history.

I was on the Mint.com blog this morning (one of my favorite sites) and came across this very timely and easy to process infographic that I wanted to share with you all.

Essentially, it shows that in the past year, Americans have made a conscious effort to curb their debt and put some money in the bank as savings. Specifically, for all of Mint’s users (over 2 million people) overall debt shrunk by an amazing 14.3 percent.

What does this mean?

First of all, it signals a change in behavior. The economic crisis and global recession has given a reality slap to pretty much everyone that owns a credit card. Further, it has made clear that living outside your means is a surefire path to financial disaster. Thanks to these hard-learned lessons, responsible spending and saving are much more prevalent and hopefully are here to stay.

How can I take advantage of this trend?

Take a step back and evaluate your financial situation. How much money do you make a month? Do you have a budget? If not, we have a great budget template that can help you get started. Also, be sure to check out our extensive Credit Education Center.

Try to set aside up to $100 a month in a savings account. You don’t have to put a full $100 in there, but as much as you can spare without the possibility of needing to immediately draw off of it to pay for daily things. Just for the sake of example… if you put aside $100 a month for a year, that’s $1,200 in savings (plus interest) that you could use for a vacation, a new computer or anything else you need or want.

Don’t overspend on your credit cards. Yeah, that sounds overly simplistic… but make the following a mantra, “Do I NEED this?” If the answer is no, put it back or make a wish list… they come in very handy at birthday or holiday time when family and friends ask you what you want for a gift!

At some point in your credit card life, you might become tempted to play the balance transfer game.

Here’s how it works: You get a high balance on your credit card. Rather than pay the high interest rate, you move the balance to a card that advertises a low- or zero-percent rate on transfers. Then that promotional period expires and so you transfer to another card. And around and around it goes.

The balance transfer game, like most tricks when it comes to money and debt, is ultimately a short-term solution to a long-term problem. It’s not the worst thing you can do with a credit card, but it does little to get you out of debt and on the right path to financial responsibility. Here are some of the inevitable drawbacks of balance transfers.

1. There is almost certainly a fee attached to any balance transfer. One some cards, it might only be about 3% which doesn’t seem like much until you start transferring a higher balance over to a new card. A $3,000 transfer with a 3% fee will cost you an extra $100. This plan isn’t looking so hot now, is it?

2. It can be damaging to your credit. Yes, the more credit cards you have can be a detriment to your credit score. Having 1-2 cards is common, even recommended. Having six or seven active cards, however, will make you look irresponsible and will show up on your credit score.

3. That 0% rate is not permanent. Here is what card companies don’t want you to know about that promotional period. The interest rate doesn’t simply go up as soon as the deal expires, it retroactively puts all of the interest from the period on to your card. That means, if the period is for six months, and you don’t pay off the balance, SIX MONTHS worth of interest is automatically applied.

Instead of transferring a balance, consider calling you credit card company and requesting a lower rate – Yes, this can be done, if you are a customer in good standing and you have been with the bank for a long time. Also, hinting to the company that you’re considering switching card companies won’t hurt.

Image credit: debtcovered on Flickr.

When I was in college, I bought my first laptop using a financing option. The terms of the agreement stipulated that if I paid off the balance in six months and make at least the minimum monthly payments, I wouldn’t be charged any interest. Perfect, I thought. I’ll put a little aside each month and in six months, the laptop is mine. Like any good American, I became complacent and kind of ignored the bill.

About three months in, I forgot about it all together, and didn’t look into the charge until the end of the six month period.  Because I didn’t read the fine print, I didn’t realize that missing a payment, or even being late on a payment meant the no-interest financing deal was off, and I was immediately charged the full six months of interest.

That’s the dirty little secret about no-interest financing. It’s incredibly fickle. There is no margin for error. Not only that, but the interest rate jumps from a wonderful zero percent, to a wallet-crushing 20% or more. After that expensive lesson, I still take advantage of no-interest financing, but now I set up automatic bill pay. If you are going to take advantage of a seemingly great financing offer, I suggest you do the same.

I’m sure you’ve seen at least a few ads in recent times from your bank or credit card company pushing “paperless billing”. There are definitely some positives and negatives to ditching the hardcopy statements… so let’s go over them now.

The Good

First of all, by ending paper statements, you’re being environmentally friendly. If you think about how many pieces of mail you probably get from your bank(s) during the course of a year, the stack grows very fast and wastes a lot of natural resources. This also allows you to be more aggressive about cleaning out old paperwork; if you’re like me, you might have a binder somewhere with all your statements in one place taking up space that could be gotten rid of.

The Bad

Getting rid of paper statements means you have one less reminder during the month to pay your bill(s). If you have an automatic payment system set up, this isn’t quite as important. However, if you have multiple bills every month that are somewhat difficult to keep track of, extra reminders are always welcome.

An Extra Consideration

Although 99% of all our banking information is generally available online now (statements, documents, etc.), sometimes it is smart to keep a paper record. You could think of it as a double-check to what you know you spent over the course of a month and let it serve as an offline backup. If you ever are in a situation were numbers are not adding up correctly, the hardcopies of your spending will come in handy.

What’s your opinion on paperless statements and/or billing? Let us know in the comments!

If you are attending college for the first time in the fall, you have probably been inundated with a list of items you need to buy before your folks drop you off at the dorms, from a laptop to a shower caddy. Well, here is the opposite of that list. Here are some things you will be tempted to pay for in college – but shouldn’t.

New Books at the Bookstore – During my entire freshman year in college, I bought all of my books at my school’s bookstore. I spent a little over $1,000. After that, a friend introduced me to Half.com. From then on, the most I ever spent in a semester was $150.  The point is, there are so many options out there for finding the textbooks you need, that you should consider your college bookstore like a last resort. Check out Half.com, Amazon.com, or even eBay. Ask your professor if she keeps one on hold at the school library. Speak with a couple of classmates to see if they are interested in sharing a book.

All of these are better options than the school bookstore.

Writing Services – Regardless of your major, you’re going to have to do a lot of writing in college. You will also see a number of ads from “writing professionals” who want to lend you a helping hand. Do. Not. Bother. First and foremost, having someone do your work for you is unethical. You and/or your family are paying a lot of money for you to get an education, not to have some hustler do your work. Second, it’s astronomically stupid. Many professors are wise to these services and all it takes is a hint of suspicion and a quick Google search and you will be busted. These days, many colleges and universities have zero-tolerance academic honesty policies. It’s just not worth it. Write your own paper.

Fast Food – You will be tempted as a student to simply spring for a burrito and a Coke every night. Don’t. While it’s okay to cheat every so often (I used to allow myself fast food on Friday and Saturday, and either cooked or visited the dining hall every other day), if you become a regular at your area Burger King, you’re going to get a head start on your Freshman 15, and the only thing you will have that’s skinny is your wallet.

Credit Card fees – If you elect to get a credit card for school, be responsible. Set up automatic billing so you don’t miss a payment and get hit with a late fee.

ScholarshipPoints code: NOSPEND

Although both of these cards are extremely common out in the world, sometimes the distinction isn’t clear and people wonder why they both exist. ATM & Debit cards both serve the same purpose — eliminating the need to carry cash — but operate slightly differently in some respects. In addition, ATM cards are usually much easier to get than check or debit cards.

What they both do:

No matter which type of card you have, they will both be able to withdraw, deposit and check balances at any partnered ATM. In addition, if you belong to a consortium like NYCE or the SUM network, you will have a much larger array of ATMs available for you to use without extra fees. (more…)

“Take 10% off those jeans today!”

“Get 25% off your next purchase!”

“Finance that laptop with a low interest rate for 18 months!”

These days, almost all major retail chains have their own store-specific credit cards, and with them, a host of attractive introductory offers.

So what’s the catch, you ask? With interest rates often in the mid-20% range, the fees are much stiffer if you don’t pay off your balance on time. In just one or two pay cycles, that $10 discount can become canceled out by interest.  But while the interest rates are often astronomical, there are some positives to using a retail credit card.

For starters, it is a very easy way to start building a line of credit. If it’s a store in which you generally use cash, odds are you can pay it off right away anyway, so by using a credit card, you not only get the discount, but improve your credit score. Retail cards often have a very low credit limit as well, which means you can boost your credit rating without the risk of spending your way into bankruptcy. On top of that sweet introductory offer, many stores have Customer Appreciation Days and reward programs that can provide further discounts down the line.

If you’re looking for a bigger purchase, such as a computer, shop around for stores that offer six months or a year of zero percent interest. Then, you can pay it back a little at a time, and as long as it’s paid by the deadline, you don’t owe any interest.

As with normal credit cards, responsibility is key. Avoid overuse and always pay your balance. For more student credit card tips, visit our forums!

If you browse the Internet often (I’m guessing you do since you’re reading this), chances are you’ve seen the display and banner ads for various types of online checking and savings accounts. Often they advertise high interest rates, low or no fees, and a variety of other incentives to draw you toward their business.

The Good

Higher interest savings and checking accounts are always a great thing. This is especially true if you have high balances in your accounts, but want the money easily accessible instead of in a Certificate of Deposit (CD) or investment. Online banks are typically able to pay these higher interest rates to handle your money due to the fact that they exist only as an electronic entity or have very few brick & mortar locations.

Another benefit of this type of bank is most of them offer some sort of ATM fee reimbursement. Obviously if the bank is mostly online, they won’t have many of their own self-branded ATMs, and this becomes more and more useful.

The Annoying

Deposits. One thing that I found incredibly annoying about having an online checking account was having to remember to mail my deposits to an post office box in the middle of nowhere. This is frustrating on multiple levels, considering the fact that checks can get lost in the mail and mail in generally has become less and less reliable over the years to physically transport much of anything. Some banks allow you to scan your checks and email them to an account representative, but this isn’t quite mainstream yet for consumers.

The (Potentially) Ugly

I want to preface this by saying most of the online banks I have encountered do NOT have this problem, the opportunity is there. Due to the lack of physical locations, the necessity for providing top-notch and industry leading customer service is incredibly vital. It can be difficult for an online bank to respond to customer questions in a quick manner, so occasionally there can be long wait times. Many online banks alleviate this by providing multiple channels of communication with their customers, including live chat, telephone and email.

All in all, an online bank can be a very flexible option if you tend to move a lot or have your time split between two places (like many students often do.) If you decide to spring for an account, make sure you do your homework and know what resources are available. And of course, if you have any questions, feel free to ask them in our Student Platinum forum!

One of the nice things about having a credit card is the perks. Card companies love to offer incentives to customers so they will use their cards more. Two of the most popular – and useful for customers – are cash back and rewards points programs. Which program works best for college students? Let’s break them down.

CASH BACK: Cash back programs allow you to earn cash based upon a percentage of your daily charges. For most cards it’s a flat rate; for others you can earn more or less depending on what type of purchase you’re making. My card, for example, lets me earn up to 5% cash back on gas. (A nice bonus if you’re planning a road trip.) Other cards allow you to earn more cash back for things like groceries or using your card at certain stores.

REWARDS POINTS: Points programs earn you a specific number of points for every dollar you spend. Those points can then be used almost like a gift card at certain stores designated by your card company. One of the most common types of rewards points programs are airline miles cards. (I would highly recommend this if you are going far away to school and will need to fly home a couple of times per year.)

So which is best for you? Obviously, cash back offers you more freedom. Unlike rewards points, you can use your savings pretty much anywhere, or to pay off some of your balance. It’s like getting a small discount every time you shop.

Conversely, rewards points typically give you more since they are targeted toward certain stores. If your card is partnered with a specific department store, both the card and the department store will want you shopping there.

I would personally stick with cash back if you are planning to make a bunch of small purchases at many different locations. Even if you’re only getting 1% cash back every time you use it, it can still add up.

However, if you know the stores where you plan to shop, and those businesses coincide with your credit card rewards partners, you might be better off using a points program. As I said before, if you plan to fly a couple of times per year (either to go home or on spring break), then I would recommend an airline miles card. A friend of mine went to school in Boston, but lived out in California. She used her card enough where her flights were almost all paid for by the time her junior year came around.  NOTE: Some cards have expiration dates for rewards points and airline miles. Always check these first.

Also, remember cash back and rewards points are based on your use of the card. If you use the card too much and can’t make your payments, the impending interest you will owe could render any points or cash moot. So be careful!

ScholarshipPoints code: CASHREWARDS

Image credit: pfreviews on Flickr