Like a tidal wave of credit, each September offers are made to just about every student on every campus in Ireland. While this can be a great first step to independence, it can also be the first stumble into serious debt. The average first year student will receive an average of 10 credit card offers, and while that can seem like the best thing ever to happen to you, these offers can be a debt trap that will follow you around for years to come.

Credit cards can be a great tool to build your credit record, but only after you understand how these offers operate and the common pitfalls:

1. Credit cards are NOT free money.
2. Credit cards ARE legally binding contracts.
3. Credit card debt is one of the leading sources of financial stress.
4. Credit cards are the most common form of out of control debt.

Scared yet? You should be! A credit card is a legal contract allows you to borrow money from the credit card company. That contract also states that you will pay the amount borrowed back, with interest. The amount varies but is usually between 15% and 25%. That means that for every €1000 you spend, you pay back between €1150 and €1250 at the end of the year. Some cards also carry late fees, monthly or yearly fees, and penalties if you go over your limit. And, if you start falling behind on payments, you will find that your total amount owed goes up dramatically.

So how can you be a smart credit card consumer? Here are some tips:

• Understand Your Rate: Credit card companies often offer low starter rates, but these can quickly go up to very high interest rates. Know the real APR on your card.
• Limit Your Cards: Only take out one credit card. Look for the one with the lowest long-term APR and go with that. Manage it carefully to build your credit.
• Treat It Like Cash: Use your credit card sparingly and treat it like cash. If you spend money on dinner, make sure to deduct that amount from your cash account. That way you know you can have enough to pay the card off in full each month, rather than make the minimum, interest-carrying payments.
• Budget for Credit: Make sure your monthly budget includes your card payments. DO NOT blow off the monthly minimum; this is how the road to credit hell is paved.

By following the above advice, you can use a credit card responsibly. By having a credit card, aiming to pay off your balance each month, always meeting at least the minimum payment, and never going over your limit, you can begin to build the long-term credit rating you’ll need as an adult for things like car loans, mortgages and even overdrafts.

So remember: use your credit powers for good and not evil, and it will treat you well when you treat yourself!

- – - – - – - –

Feeling lucky?
Head along to the home page of LittleQuiz.com here and answer those three little questions to be in with a chance to win this week’s prize!

- – - – - – - –