Credit Cards Or Student Loans?
By Matthew Kelly
•With a federal loan, your interest rate will be low (around 5.125) and your payments will be deferred for 6 months after graduation.
•With a card, the interest rate can be as high as 21%. Interest begins accruing almost immediately, and you need to begin paying off the bill the next month.
This is not to say that cards do not have a place in your college life. It is good to have one national card (Visa, MasterCard, Discover) on hand to help you build a positive history and to provide security in emergencies. When you decide to apply for a card, compare annual fees, interest rates, and introductory offers. And to keep yourself out of debt, try to-
•Pay your balance each month to avoid interest charges
•Pay your bill on time to avoid late charges
•Avoid cash advances, which come with large finance charges and interest that begins accruing immediately.
•Use your card once a month to build a good payment history.
•Avoid cards that attempt to charge you an annul fee.
What if you can not get a card? There are a few ways to do that.
Ask someone to cosign on a card for you to help build history.
Obain a secure
card. This is a card that you would deposit funds into and use based on the amount of funds you have available. This is a great way to build credit. Most banks will offer you an unsecured card within 6-12 months after opening a secure card.
Federal Education Services is a company that specializes in federal student loan consolidation, Stafford loan origination, PLUS and Graduate PLUS loan origination and as a resource for students with questions regarding educational financing. For any questions regarding this article please contact Federal Education Services. A friendly loan specialist can be reached at (877) 222-4727 or you can find us on the web at www.feded.net.
