Top 5 Money Tips for College Students

As students prepare for their college semester, there are a few key points to keep in mind about money that will result in less stress and a productive semester

Despite living in a society driven by money, students are taught very little about how money works. According to United College Marketing Service, 8.5% of students drop out of college due to money related issues. That makes money issues the number reason for students dropping out, even ahead of academic failure. You can’t win at sports without understanding the rules and learning how to play. The same principles apply to money. Don’t get embarrassed running the wrong way with the ball.

Credit cards are like power tools. If you use it without knowing how, you will likely get hurt. Millions of dollars are spent on marketing credit cards to college students as they will receive about 50 solicitations per semester. There is a lot to read in the fine print, such as adjustable interest rates, transfer fees, late fees, etc. In addition, if you use a credit card to supplement your income, you will create a life-long habit of overspending which can create a vicious cycle of being in debt for years to come.

Debit cards are a much better alternative to credit cards since you can only spend money that you actually have in your account. That does not mean you do not have to be careful with debit cards. If you are using an ATM that is not owned by your bank, you could end up paying as much as $6 per transaction, just to get cash. In addition, you may be charged each time you use your debit card at the store, if you don’t select the “debit” button. Debit cards can be a great money management tool in our automated world, but there are still rules to follow to avoid getting ripped off.

You can’t always rely on your debit card receipts as a means of tracking your account balances. If you have to write a check, or you have scheduled an automated payment, that withdraw amount will not show up on your receipt until after the money has come out. For instance, if you schedule a $100 payment to come out on the 15th, and you check your account on the 12th, it still shows that extra $100 in your account. If you forget about that scheduled payment, then you may spend that $100 and get hit with overdraft fees. In addition, some ATM receipts lag behind by a day or two worth of transactions. It is important that you keep track of how much money you actually spend from your account, and how much is going in each month.

Identity theft and stolen credit card numbers have been increasing over the past several years. Never give out your personal identification number (PIN) for your credit or debit to anyone, not even a roommate or friend. Don’t carry your social security number in your wallet. If you lose your wallet (or it is stolen) you have basically handed over your drivers license number, your social security number and your credit card numbers. There is not much else an identity thief would need to take it from there. Never verify account information via email, and only use your credit card on secure sites (they would have ‘https’ instead of just ‘http’ in the browser address window). Never leave your credit or debit card laying around in plain view. Overall, treat your personal information with respect and keep it private. You never know who is waiting for a trusting young person so they can spend your money or open a credit card account in your name.

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Bill Pratt is a contributor for YoungMoney.com and the author of "Extra Credit: The 7 Things Every College Student Needs to Know About Credit, Debt & Ca$h" and "Money Made Simple". You can find tons of useful articles and calculators and have your questions about money answered at www.ExtraCreditBook.com.