Friday focus: Personal finance

The average college student has more than four credit cards, according to a survey by student lender Sallie Mae.

And the vast majority get hit routinely with finance charges because they don’t pay off their monthly balance, according to the April 2009 survey.

Among college freshmen, the median amount of credit card debt has nearly tripled in the past five years, says Sallie Mae, zooming from $373 in 2004 to $939 today.

With college costs ratcheting upward and credit cards as easily available around campuses as cheap beer, it’s no surprise students are piling on the debt as fast as they’re pulling out the plastic.

Debit cards – usually tied to a bank account – also can be financial quicksand. In its 2007 study – subtitled “The Most Expensive Burger Ever,” the Center for Responsible Lending found that young consumers – ages 18 to 24 – pay more than $3 for every $1 in a debit card overdraft.

When getting a debit card from a bank or credit union, avoid those that offer “overdraft protection” tied to a credit card. Look for one with overdraft protection that’s linked to your savings account. If you don’t, every time you overdraft, many banks will ding you an average of $34.

But whether it’s debit or credit, paying with plastic doesn’t have to be a problem.

There are lots of good reasons to get a credit card: It can be a lifesaver in an emergency, say if your car breaks down or you need to book a quick flight home.

And having a credit card in your name also starts building up your credit score. The higher your score, based on a good payment history, the easier your financial life is later, especially after graduation.

A bad credit history can cost you more for a car loan, the security deposit on your apartment and, someday, lots more for a home loan.

Here are some college-wise tips on credit cards:

•Look past the freebies. Lots of credit card companies will dangle free stuff T-shirts, gift cards, sports balls to get you to sign up. Don’t be swayed until you’ve looked over the terms.

•Read the print. Understand how much you’ll get hit for finance charges, late payments, cash advances and other uses.

•Be wary of tempting “low-low” interest rates known as teasers that often are only temporary. •Avoid using credit cards for everyday purchases, like snacks, movies, restaurant meals. It’s too easy to pile on the spending charges.

•Always pay off your monthly bill, or at least pay more than the minimum amount due.

McClatchy