THE HELP DESK The Help Desk: Top Tips

Kids' credit cards

College students ramp up their use of credit cards, even to pay for tuition. But is this a too costly lesson in personal finance?

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By Gerri Willis, CNN personal finance editor

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For more information on managing your largest investment, check out Gerri Willis' 'Home Rich,' now in bookstores.

NEW YORK (CNNMoney.com) -- College students are pulling out the plastic now more than ever. The average credit card balance is over $1,600. Here is what your college student needs to know before stepping foot on campus this fall.

1. Credit card debt

Student credit card debt is a big problem. According Sallie Mae, 30% of students put tuition costs on their credit cards. And only about 17% pay off their balance regularly.

And consider this: students, on average, have almost five credit cards to their name. Bottom line here is that college students should be building credit when they're in college -- and credit cards is a good way to do that. But building good credit card habits is crucial for young people.

2. New legislation

New CARD legislation will take effect in February. One big change we'll see is that adults who are 21 or younger must get a cosigner if they want a credit card. And, credit card issuers will be required to move off their marketing off-campus.

Some experts speculate that this may cause marketers to hit up the local bar or to set up on off-campus events. Of course, that doesn't take place until February -- so this fall semester you can be sure credit card issuers will be hard at work trying to get students to sign up.

3. Know what to look for

Check out student-specific cards -- Look for a card that gives you an interest rate of 17-18% with no annual fees. And don't apply for a rewards card or cash back card unless you are sure you can pay off the balance in full each month.

Here are some of the best rated cards from cardratings.com:

  • Citi ForwardSM Card
  • Chase +1 Student MasterCard
  • Discover Student Card

You don't want to use credit cards for things like tuition, rent or groceries.

Try to use that card only in emergencies, like to book a flight home or to pay for an unexpected car bill.

Make sure you strive to pay off that bill every month. You really don't want to keep a revolving balance on a credit card -- especially if you don't have a steady source of income.

-- CNN's Jen Haley contributed to this article.

Got a financial dilemma? Go to CNNMoney.com/helpdesk to submit questions, read the Help Desk articles and check out new Help Desk videos. And tune in to CNN's Newsroom Tuesdays and Fridays, when Gerri Willis and other experts answer your questions. To top of page

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