GoStudentSavings.com: Student credit and student loans

A typical college curriculum is loaded coursework dedicated to history, math, english, science, and whatever classes that support your actual major. The one thing that colleges lack in teaching is basic financial education, most notably how to handle debt; including credit cards, student loans, and finances beyond the college experience. I imagine some college students have no concept of balancing a checkbook and the word "budget" what is that? Sad but true.

Many websites offer good information about credit card information and definitions. If you want to learn more about student credit or information about student loans, visit the student credit page here or the student loan page here.

Debt Consolidation....... Some things to consider.

You have probably heard of loan consolidation at some point. I remember the first time I consolidated my debt. I actually went to the student financial counseling center on campus(which I recommend seeking out on your campus), and getting a lot of good information, particularly deadline dates to apply for consolidation. I didn't know a date existed, but it does. Let's go over some things about debt consolidation according to Consumer Action:

What is Debt Consolidation?

Debt consolidation may be an answer for some people that have credit problems. Debt consolidation involves borrowing enough money from one lender to pay off all your debts.


When you consolidate:

-You make only one payment each month, to the new lender.
-You will usually pay out less money each month.
-You usually pay more money in finance charges to consolidate debts.
-You make payments longer.

Before you decide to consolidate your debts, look at your other choices:

-Talk to your family members about the problem. See if you can lower expenses or raise income.
-Seek financial counseling (on campus, or elsewhere). You can go to a credit counseling service. They may know a solution you have not thought of.
-Call your creditors to see if you can work out some change in monthly payments that will ease the pressure. The creditors may be willing to adjust payments.

*If you do decide to consolidate your debts, shop around. There are different places you can go, such as banks, credit unions, and finance companies.

Before you choose whom you will get the loan from, find out the following information from each place:

-The charge for the service.
-The annual percentage rate (APR).
-The amount of your monthly payments.
-How long you must make payments.
-What the total amount is that you will pay.
-What happens if you miss a payment.
-What happens if you are late making a payment.

Potential Problems:

Making only one payment a month may make you think you are better off than you actually are. You may be tempted to buy something else on credit, and before you know it you could have an even worse problem: too many bills with too little income.

Finally..

Be sure to seek out your on campus financial counseling center if one exists, or a counselor at the financial aid office to see what your options are. Generally your original lender who issued your loans will most likely be the one to consolidate your loans because they don't want you taking your borrowed money elsewhere. Keep in mind that now is a good time to consoldiate while interests are low.

0% APR?

One tidbit of information that you should know, is the the reality of a "0% APR". What does it mean? You probably have seen 0% APR displayed on solicitations in your regular mail as well as in your email inbox. Your APR is simply the interest you pay on a loan or credit card. You have to pay attention to credit cards because of the way your interest payments are calculated. The 0% APR is the promotional rate. Your new APR will become active as soon as the promotional period has ended. The 0% APR is not necessarily a bad thing and you can make it work for you if you don't let your spending get out of hand and if you make your payments on time. Unlike traditional loans, instead of interest being compounded monthly and having those payments eventually go to the principal amount, credit card payments are computed on an average daily balance and compounded daily. An explanation of how your payment is calculated is outlined in a disclosure given to you by the credit card company. Each credit card issuer's terms are different. "0% APR" could mean you pay no interest for 6 or 12 months, however you are still paying minimum payments per month. If you fail to make these payments on time then the contract rate will be applied and can be as high as 29.99%.

Also, 0% APR promotionals generally apply to purchases you make or balance transfers from another credit card or loan balance. Be sure to understand which one it applies to.

Also check out the Federal Reserve website as well. It has published some really good information on "Choosing a credit card".



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