College Students: Are You Making These 9 Money Mistakes?

Photo (cc) by Sterling College

When you were packing to leave for college, how many times did financial management cross your mind? Let me guess; probably not many. More than likely, you were too busy listening to everyone telling you to be safe, stay away from trouble and to study hard.

But what about the money talk? This topic is typically put on the back burner, although, according to Credit.com, 7.2 percent of college students drop out as a result of debt or financial pressures.

And it doesn’t help that a lot of students are financially illiterate, despite strong public support for teaching personal finance in school. “Yet just four states require a stand-alone personal finance course in high school and just 13 require money management instruction as part of some other class,” Time says.

Are you being wise with your finances? Here are signs that you may be doing otherwise:

1. You’re enticed to sign up for credit cards

While the Credit CARD Act placed restrictions on access to credit cards by those younger than 21 and also put some limits on credit card marketing on campus, students are still being enticed to sign up for credit cards. Says LearnVest:

Despite new regulations, predatory debit and credit card marketing to college students is still a major issue. Almost 900 colleges have lucrative debit and credit card partnerships with financial firms, according to new findings by the U.S. Public Interest Research Group, enabling banks to target and profit from over 9 million students across the nation.

I fell for the trap of signing up for a credit card in exchange for a freebie in my freshman year. A local sub shop, which was fairly costly but popular among the student body, partnered with a major credit card issuer to offer a free combo in exchange for signing up for a brand-spanking-new shiny piece of plastic.

2. You’re spending like there’s no tomorrow

With college comes newfound freedom and, for many, poor spending habits. It is all too common for students to exhaust all the funds allocated to them for the semester way before the semester ends because they fail to budget properly. Others have a reckless disregard for managing their money and spend like money grows on trees.

Regardless of which category you fall into, you should instead seek out bargains on things you need. For instance, many campuses offer events that serve free food. Also, inquire about student discounts when you are making a purchase. Find ways to save on textbooks.

3. You’re falling victim to the minimum-payment trap

If you think that paying the minimum on a credit card with a high balance will suffice, you’re sadly mistaken. You’re going to end up spending way more than the items’ original purchase price because of interest, and the bill could take years to pay off. Your credit card statement will tell you how long it will take if you pay only the minimum due.

4. You’re taking out emergency student loans

Does the purchase you are looking to make really constitute an emergency?

An acquaintance of mine once took out an emergency loan to make a small down payment on a car. The only problem was that the car not a necessity: she already had a car that was only a few years old. She just wanted to ride in style. It ultimately ended up costing her way more than she’d bargained for when she graduated with a number of “emergency loans” under her belt and struggled to find decent employment for almost a year.

5. You’re borrowing from private financial institutions

Many private lenders offer student loans that are unsubsidized, which means they accrue interest from Day One. Unlike federal loans, they may also require that you make payments while you are enrolled, and your interest rate may be variable and will depend on your credit score.

Forbearance and deferment are usually not an option for private student loans. If this is a last resort, be sure to proceed with caution. Check out this comprehensive comparison chart from the U.S. Department of Education.

6. You’re enrolling for an extended period of time

As tough as the real world can be, we all must face it some day. But many students beg to differ and use college as a buffer. The problem with this approach is that the federal government will offer you only so much aid before it cuts you off, and you will have to turn to private lenders for funding.

Even if you’re in graduate school to get ahead or because you can’t find a job, always perform a cost-benefit analysis and plan ahead, because things won’t just magically work themselves out.

7. You’re being reckless with confidential information

You may trust your roommate or study buddy, but what about all the other strange folks roaming around college campuses? The bottom line is that you should not be so quick to trust anyone with confidential information about your finances because of the risk of identity theft. See “10 Reasons You’re a Target for Identity Theft.”

8. You’re signing up for “free” banking with hidden fees

A lot of the banking products out there designed for college students are a nightmare waiting to happen. Read the fine print before you sign up. Banks have dozens of fees that may not be apparent to you until you have to pay them.

9. You’re exercising the cash advance option on your credit card

It may not seem like such a bad idea to use a cash advance from your credit card if things get a little tight. But cash advances come with a standard fee of as much as $35 or 3 percent to 5 percent of the total amount. Also, they often have higher interest rates than your card, and the interest starts accruing immediately, leaving you without a grace period to pay off the balance.

Bottom line: Don’t let your newfound freedom overshadow your financial responsibility. Otherwise, your temporary pleasure will soon be converted to long-term pain in the form of exorbitant debt balances, the possibility of poor credit scores and the stress that will accompany both.

What steps have you taken to adopt responsible financial habits? Let us know in the comments below or on our Facebook page.

Disclosure: The information you read here is always objective. However, we sometimes receive compensation when you click links within our stories.

Read Next
7 Surprising Features That Boost Your Home Value
7 Surprising Features That Boost Your Home Value

You can add value to your home without hiring a contractor to do expensive renovations.

8 Award-Winning Products That Impressed 40,000 Shoppers
8 Award-Winning Products That Impressed 40,000 Shoppers

The Product of the Year awards help shoppers find the best pet products, personal care items and everything in between.

33 Home Upgrades That Cost Less Than $100
33 Home Upgrades That Cost Less Than $100

A little money goes a long way with these imaginative projects. You can do most of them yourself.

10 Mistakes That Cost You Money at Warehouse Stores
10 Mistakes That Cost You Money at Warehouse Stores

Wholesale clubs might have great deals, but these mistakes will cost you.

10 Bad Money Habits That Are Robbing You Blind
10 Bad Money Habits That Are Robbing You Blind

Here’s how to change those bad behaviors.

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Most Popular
9 Things You’ll Never See at Costco Again
9 Things You’ll Never See at Costco Again

The warehouse store offers an enormous selection, but these products aren’t coming back.

11 Things Retirees Should Always Buy at Costco
11 Things Retirees Should Always Buy at Costco

This leader in bulk shopping is a great place to find discounts in the fixed-income years.

Over 50? The CDC Says You Need These 4 Vaccines
Over 50? The CDC Says You Need These 4 Vaccines

Fall is the time to schedule vaccines that can keep you healthy — and even save your life.

11 Household Items That Go Bad — or Become Dangerous
11 Household Items That Go Bad — or Become Dangerous

When you get the impulse to stockpile these everyday items, pay close attention to their expiration dates.

Why Cloth Masks May Increase Your Coronavirus Risk
Why Cloth Masks May Increase Your Coronavirus Risk

A new study finds that wearing a cloth mask can backfire if you don’t clean it properly.

8 Things You Can Get for Free at Pharmacies
8 Things You Can Get for Free at Pharmacies

In this age of higher-priced drugs and complex health care systems, a trip to the pharmacy can spark worry. Freebies sure do help.

The 15 Worst States for Retirees in 2020
The 15 Worst States for Retirees in 2020

Based on dozens of metrics tied to affordability, quality of life and health care, these are not ideal places to spend retirement.

7 Ways to Boost Your Credit Score Fast
7 Ways to Boost Your Credit Score Fast

Your financial security might soon depend upon the strength of your credit score.

These Are the 4 Best Medicare Advantage Plans for 2020
These Are the 4 Best Medicare Advantage Plans for 2020

Medicare Advantage customers themselves rate these plans highest.

The 10 Most Commonly Stolen Vehicles in America
The 10 Most Commonly Stolen Vehicles in America

A new model parks atop the list of vehicles that thieves love to pilfer.

This Is the Cheapest Place to Buy a Used Car
This Is the Cheapest Place to Buy a Used Car

Looking for a good deal on a set of wheels? This should be your first stop.

19 High-Paying Jobs You Can Get With a 2-Year Degree
19 High-Paying Jobs You Can Get With a 2-Year Degree

These jobs pay more than the typical job in the U.S. — and no bachelor’s degree is required.

5 Ways to Get Amazon Prime for Free
5 Ways to Get Amazon Prime for Free

Hesitant to drop $119 a year on an Amazon Prime membership? Here’s how to get it for free.

5 Keys to Making Your Car Last for 200,000 Miles
5 Keys to Making Your Car Last for 200,000 Miles

Pushing your car to 200,000 miles — and beyond — can save you piles of cash. Here’s how to get there.

26 States That Do Not Tax Social Security Income
26 States That Do Not Tax Social Security Income

These states won’t tax any of your Social Security income — and in some cases, other types of retirement income.

10 Reasons Why You Should Actually Retire at 62
10 Reasons Why You Should Actually Retire at 62

If you can, here are several good reasons to retire earlier than we’re told to.

3 Ways to Get Microsoft Office for Free
3 Ways to Get Microsoft Office for Free

With a little ingenuity, you can cut Office costs to zero.

5 Things That Make Life More Meaningful for Retirees
5 Things That Make Life More Meaningful for Retirees

Retirees agree: These are the things that give them purpose and fulfillment in their golden years.

15 Amazon Purchases That We Are Loving Right Now
15 Amazon Purchases That We Are Loving Right Now

These practical products make everyday life a little easier.

View More Articles

View this page without ads

Help us produce more money-saving articles and videos by subscribing to a membership.

Get Started

Add a Comment

Our Policy: We welcome relevant and respectful comments in order to foster healthy and informative discussions. All other comments may be removed. Comments with links are automatically held for moderation.