Taking Charge Arkansas Quest TAKING CHARGE When you arrive on campus eager and ready for independence, don’t be deceived by the sea of tables advertising every credit card imaginable, from MasterCard and Visa to Discover Card and American Express. Although it will be tempting, spending money that you do not have can be dangerous and expensive. It’s called debt, and your spending habits could come back to haunt you. Everyone has a credit history, and credit bureaus sell this information to employers, lenders, insurance firms and other companies you may need in the future. Your credit rating also can affect whether you can buy a house, get a loan or buy a car. According to the Charles Schwab Corp.’s 2007 Teens & Money survey, almost a third of teens are already in debt, and of the teens surveyed, only 26 percent know how credit card interest and fees work. So before using your credit card to buy a Nintendo Wii for you and your dorm buddies, talk to your parents about your finances, know the interest rate applied to your purchases and remind yourself of what it’s really going to cost in the long run. THE MUSHROOM EFFECT A few purchases can easily get out of hand, leaving you with a lifetime of debt. See what happens when you have a $2,000 debt.
Beginning card balance:	$2,000
Interest rate:	19 percent
Minimum payment:	$75
Time until payoff:	2 years, 11 months
Total you’ll pay in interest:	$619
Total amount paid:	$2,619

But look what happens when you pay just $25 more per month.

Time until payoff:	2 years, 1 month
Total you’ll pay in interest:	$424
Total amount paid:	$2,424

For the price of about two CDs a month, you can be debt-free about a year sooner!

PAYING WITH PLASTIC
Here are some alternatives to credit cards

Automatic Teller Machine Card
Take money out of your checking or savings account without going inside the bank and visiting a teller.

Thumbs up:

• ATMS are everywhere and very convenient.
• With most accounts, you can’t withdraw more money than you have.
• All you need is a bank account.

Thumbs down:

• Sometimes ATM fees can get pricey, especially when you use an ATM other than your bank’s.

Check or Debit Card
Draw money out of your checking account without writing a check.

Thumbs up:

• No more writing a check!
• Can be used anywhere a check or a credit card is accepted.
• You do not have to carry a lot of cash.

Thumbs down:

• You have to keep your receipts so you can track what you’ve spent and balance your checkbook.
• You can spend more money than you have and then suffer large overdraft fees.

Prepaid Card
Prepaid cards, such as the Visa Buxx Card, are designed for teens and college students. Parents put money on the account, and the card is then used by the student as a normal credit card.

Thumbs up:

• Obviously, the big benefit here is that you’re spending your parents’ money, not yours.
• Convenient for the family; parents don’t have to send checks to their children — they can just transfer funds to the prepaid card from their checking account.
• You can’t run up debt on this card.
• Great for those times when you need money fast.

Thumbs down:

• Your parents can keep tabs on you by reviewing your account online and checking to see where you are spending your money.
• You are not in control of how much is put on the card — that’s left to your parents (this actually could be a positive, depending on how you look at it).

Thumbs up:

• Easier to use than cash.
• A convenient way to monitor your meal account and store purchases.

• If stolen, people can use your food and bookstore account.