What Every College Student Needs to Know About Credit Cards

Video Transcript

"Hi, my name is Bill Rae. I'm with Alumni Financial Services out of Seminole, Florida. I've been in the business in the finance world for well over thirty years. Your question is what every college student needs to know about credit cards. Let me be very frank. When you get a credit card in the mail unsolicited it is not free money. With that being said, when someone is in college, especially a young person in college, this is an excellent time to begin to learn good habits and to build a good solid credit for your future. If you get a credit card, understand that every credit card comes with some type of cost. There's a certain amount of time that they're going to allow you to buy a product and not pay interest on that if you pay the bill in full. The reality is they're hoping and they know that most of you won't. They know that most of you are going to put a balance on it and carry it. There's a simple rule in the finance world that tells us how our money will double. It's called the rule of seventy two. Do understand it can be used against you. For instance, if you run out on a Friday night and put fifty, sixty dollars at the local pizzeria cause you're studying, you know, that's nice. You can reach in and grab plastic. But that fifty or sixty dollars may end up costing you a hundred, a hundred and fifty dollars. So with all credit cards, what you want to know before you sign on the dotted line is: What is my cost for this card? Is there an annual fee? What is my interest rate? More importantly, how do you compound that interest rate? Or how do you charge that interest rate? Is it simple? Is it compounded? And if it's compounded? Is it daily? Weekly? Monthly? Yearly? What I'm trying to say to you is read the fine print. It's designed that way for a reason. They don't want you to read it, and they don't want you to understand how that card's working. But if you do, after all you're in college to learn, and you learn, you can utilize it to your advantage. Learn how to buy certain things such as books. Get it paid off quickly, and your credit will build. There's so much more that I could tell you about credit cards, so I will just caution you. Use them wisely. And if at all possible, don't use them if you don't have to. My name is Bill Rae. I'm with Alumni Financial Services and always we're here to help you build true wealth."