When I was in college, walking between classes, there were always tables set up with young people in brightly colored t-shirts tossing around Frisbees or offering free pizza. The only requirement for obtaining the shirt, disc, or dinner was to sign up for the credit card they were offering. They promised low interest rates and the lure of using more money than you had. Many students were lured by this (which is why you have exactly the same memory as I, even if you live in another state).
The number one reason that students have to drop out of college isn't bad grades; it's that they cannot afford to stay any longer. They have applied for too many cards, spent more than they can afford, maxed out student loans, tapped loved ones dry, the minimum wage job they have isn't enough.
As we age, the promotions don't go away; they just change. Now, I get credit card applications with the promise of enough free miles to take a trip if only I will apply.
I have credit cards. My favorite offers free miles, but my husband and I pay it off every month. If you want to rent a car, you have to own a credit card. Using credit responsibly is not a bad decision, but the trick is understanding the difference between good credit decisions and poor decisions.
Taking a loan to purchase a home is very common. If the home is within your budget, you pay a sizable down payment, and every month, you pay off both principle and interest, you are likely okay. (I've seen situations where the person wasn't okay, but usually one of the criteria wasn't really met.) Taking out a student loan to pay for a college education is an investment in yourself and your future. However, buying a bigger house to impress others or using student loans for Friday night parties with friends is a poor use of credit.
Often, if you break down your credit card purchases, you will find they are spent on the discretionary items in your budget. Borrowing money for discretionary spending creates nightmarish situations. If you can't afford to pay for it this month, just wait a month. Don't put it on a card with the idea of paying it off over time. Save the credit for those items that really matter, where you can obtain a long-term accomplishment or gain. The Frisbee just isn't worth it!
Be prosperous!
Peggy
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