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ICBA Offers Students Tips to Handle Credit Wisely

Washington, D.C. (August 4, 2009)—As the nation’s college students head back to school, and with a growing number of them planning to use credit cards during the school year, the Independent Community Bankers of America (ICBA) wants to encourage students to be responsible when using their credit cards so they can maintain their finances and establish solid credit.

“It is extremely important that students understand how to use the credit they have wisely, so they establish good credit.” said R. Michael Menzies, ICBA chairman and president and CEO of Easton Bank and Trust Co., Easton, Md. “A good credit history will serve students well when they are ready to buy a home, a car or pursue their dreams of owning a small business. Developing good habits now will foster healthy personal and business finance management skills that will serve them well their entire life.”

Research indicates that as college costs soar and financial aid tightens, more students are turning to credit cards to cover tuition, textbooks and other educational expenses. A good credit card track record starts with a good credit card. Shop around for favorable rates and terms, and check with your local community bank. The following tips can help students use credit cards wisely so they can establish good credit and avoid overwhelming debt:

  • Set up and follow a budget that includes paying off a credit card balance. “Maxing out” or charging up to your card’s credit limit can make sticking to your budget more difficult.
  • Cash advances—unlike purchases—generally have finance and interest charges that apply immediately.
  • Pay on time, every time. Whenever possible, pay more than the minimum payment owed (for example, 150 percent of the minimum) to pay off the balance faster and save on finance charges.
  • Keep records of your account number, expiration date and the phone number of your card issuer in a safe place.
  • Keep your account information confidential.
  • Never give out your credit card number or expiration date over the phone, unless you initiated the call and know who you’re dealing with.
  • Elect to receive your statement information online. Many sites offer an alert for unusual transactions and reminders of when your bill is due.
  • Consider making your credit card payment online to ensure it is received by the monthly due date.
  • Routinely access your account information online to track your spending and to quickly identify fraudulent transactions. If you see a transaction that is not yours, notify your card issuer immediately.
  • If there’s an error on your account, report it immediately by notifying your card issuer. Look for complete instructions on your monthly statement and follow them carefully to protect your rights.
  • Keep a copy of your sales receipts so you can compare what you bought with the charges on your bill.
  • When making online transactions, be sure the site is secure. Don’t let others see you enter card information.
  • Don’t lend your credit card to anyone, not even a friend. Ever.
  • If you move, notify your card issuer immediately.

“If students want to learn more about credit cards and how to manage their credit, they should talk to their local community bank,” Menzies said. “Community banks are common sense lenders that provide credit cards as a service to their customers.”

For additional information, visit www.icba.org.

* Research conducted by college loan lenders Sallie Mae and Nellie Mae.