Holidays bring onslaught of debt

Select the right credit card

With the holiday season quickly approaching, shopping malls will become flooded with saccharine-sweet holiday themes accompanied by the persistent beeping at the checkout stands. Cash, credit or debit? Would you like financial debt with that?

Credit card debt is a major concern this time of year. Students can be at a higher risk than most, as they are key targets for credit card companies.

Bob Maloney, accounting chair at UAA, said that credit card companies know that most students will usually run up balances on their cards without paying initially only to have their parents bail them out later. If payments are not made, the results can have long-lasting effects for students searching for a career.

“More and more companies are running credit checks before employment,” Maloney said. A poor credit rating can translate into getting passed over for a job.

Maloney said that using a credit card responsibly is a good way to build credit, but that there are some guidelines that should be followed.

“Don’t finance lifestyle changes,” he said. “Purchase durable goods only. You don’t want to pay for something that will be used up before it’s been paid for.”

There is a plethora of good Web sites available to keep students informed and up to date on using credit cards safely. Citibank’s Credit-ED site covers the basics of credit card safety and encourages students to keep up with their credit history and to make sure it is accurate by checking it once a year.

This can be done without cost, thanks to the Fair and Accurate Credit Transactions Act, which requires that every state offer residents an annual free credit report from each of the three major credit bureaus – Equifax, Experian and TransUnion – by visiting www.annualcreditreport.com.

Safely using a credit card and avoiding debt also requires researching what card has the most to offer. Surprisingly, commercials featuring pillaging barbarians, MacGyver or strong narration are not the most useful source for students seeking information about interest rates and annual fees.

Credit Card Assist’s student section of its Web site provides a list of “a variety of the very best student credit card offers available from the world’s leading credit card issuers” with reviews and information. The Citi Platinum Select Card for College Students was the site’s top pick because of its 0% introductory rate, benefits – including fraud protection, travel and emergency assistance services, auto rental insurance protection and travel accident insurance up to $1,000,000 – no annual fees, and student discounts at select stores. Good credit history is required and a warning was included in the review that since it has platinum status, the card has a higher interest rate, which can lead to higher expenditures if the monthly balance is not paid.

Debt is not the only danger of having a credit card. Identity theft and fraud have become much more frequent over the years, and knowing how to avoid potential risks is vital. A booklet published by the Center for Student Credit Card Education Inc. encourages students to be wary of possible dangers. Carrying a credit card that has a photo ID, knowing the billing cycles of card companies and purchasing online only from encrypted Web sites are just a few ways to avoid having a credit card and personal information stolen. Should an identity theft occur, the CSCCE advises filing a police report, contacting the three major credit bureaus to be placed on fraud alert, obtaining credit reports, closing accounts, and contacting the Federal Trade Commission.