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However, the use of credit cards by financially inexperienced students during the college years may lead to the careless use of credit cards. Irresponsible use of credit cards leads to serious social and economic consequences. These range from emotional anxiety to personal conflicts with family members to physical exhaustion as students work full time or part time jobs to pay credit card bills while juggling their college courses. Furthermore, student's academic performance begins to suffer which may lead to academic probation due to decrease in grades, dismissal from college or even bankruptcy. A poor credit history can also lead to unexpected outcomes such as rejection to professional schools, apartment rentals, home mortgages and even future job placements. Under these circumstances, students may become stressed and may in turn suffer from psychological problems such as anxiety and depression.

How Credit Card Companies Make their Money...
If you use your MASTER CARD credit card and pay off all of your charges by the end of the month you are considered to be a "convenience user" because you don't have to pay for the use of credit. However, banks don't make any money from people like that! Credit cards are profitable only when people spend more than they can afford and are willing to pay a lot for the borrowed money.

The difference between the "cost" of borrowing money by the banks and how much they charge after adjusting for inflation is extremely high. Thus, they can't raise the annual percentage rates much higher. As a result, they have been increasing the penalties for over-limit and late fees. This is accomplished by (1) increasing the penalty fees and (2) reducing the grace period for arrival of monthly payments.

In learning how to use your credit card most effectively, you need to decide whether you can stick to a budget of if you tend to be guided by your impulses.

Credit Card Secrets Banks Don't Want You to Know...

1. Interest Backdating
If you don't pay your charge card bill in full every month, most card issuers charge interest from the day a charge is posted to your account. Some charge interest from the date of purchase, days before they've even paid the store on your behalf!
Remedy: Find out what your card company does. If necessary, find another card issuer, or always pay your bill in full by the due date.

2. Two-Cycle Billing
Issuers, who use this method of calculating interest, charge two month's worth of interest for the first month you fail to pay off your balance in full. This issue arises only when you switch from paying in full to carrying a balance from month to month.
Remedy: Switch issuers or always pay your balance in full by due date.

3. The Right Setoff
If you have money on deposit and a credit card at a bank, you may have signed an agreement when you opened the deposit account that permits the bank to take those funds if you become delinquent on your credit card.
Remedy: Bank and obtain a credit card at separate institutions, or avoid delinquencies.

4. Fees are Negotiable
You may be paying up to $50 a year or more as an annual fee on your credit card. You may also be subject to finance charges of over 18 percent.
Remedy: If you are a good customer, the bank may be willing to drip the annual fee, and reduce the interest rate - you only have to ask. Otherwise, switch issuers to a card with no or lower annual fees and interest rates.

5. Interest Rate Hikes are Retroactive
If you sign up for a credit card with low rate, such as 7.9 percent, when the low rate period expires, your existing balance will likely be subject to the regular and substantially higher interest rate.
Remedy: Pay in full or close the account before the rate increases.

6. Misleading Monthly Minimums
The longer you carry out payments, the more the bank makes from finance charges.
Remedy: Pay all you can monthly.

Top Ten Tips against Fraud
• After applying for a credit card, call the company and check on its status. After your application is approved, call to confirm the estimated date of its arrival. If it is one week late, cancel and request a new credit card.

• When you receive the card, immediately activate your account through the company's fraud protection system.

• Sign your credit card immediately

• Never carry your social security card in your wallet or purse. With a credit card, picture ID and a social security card, a thief can use your identity to obtain more credit cards.

• Always destroy credit card receipts - shred them when possible - if you are not keeping them for your records. This includes carbons and automated receipts such as those at gasoline stations.

• Always destroy offers for pre-approved credit cards. They can be filled out by someone else and forwarded to their address under your name.

• Never use your credit card on the Internet without ensuring that your transaction is protected through a security encryption program.

• If a telephone solicitation is too good to pass up, insist on paying by check. Never feel pressured into giving your credit card number over the telephone. If the company does not accept checks, it may not be a reputable business.

• Always keep track of free offers that are "guaranteed" by your credit card such as dinning programs. You are often charged before the expiration of the "free" trial period. Also, check fordouble charges and mystery charges that you did not make. The material for this information flyer was adapted from The Power of Plastic© Trainer Guide (1999)