CHARGE IT! Wait! Hold on a minute! “Charging it” is NOT the right answer unless you can afford to pay the balance in full when the bill arrives.
Let’s be realistic and say you charge $500 in back-to-school purchases. Your credit card’s interest rate is at 18%. You make the minimum payment of $10 per month. In this particular scenario, it would take you nearly 5 years to pay off your shopping spree, and you would pay a whopping $215.67 in interest charges alone.
Believe it or not, the average college student has more than $2,200 in a revolving credit card balance and pays approximately $355 per year in interest. And that’s just the beginning! According to RAM Research, Americans charged more than $400 billion on their credit cards last year and paid a whopping $50 billion in finance charges. (We’re not talking pocket change anymore!)
Sallie Mae offers the following tips for credit card holders:
If you remember that your credit card is a convenience and not a source of extra money, you should remain in good financial shape.