Student in debt
Parents Need to Alert Teens to Credit Card Abuse
This week came news that the discounter known as Dollar Tree would begin accepting VISA credit cards starting at the end of the month. The news is significant, given the fact that Dollar Tree boasts more than 3,300 stores nationwide .
The retailer already accepts Discover Network cards . Meanwhile, Mastercards are accepted at nearly 1,000 Dollar Tree stores .
Since Dollar Tree caters to those on a tight budget, you might expect young shoppers to take advantage of what the store has to offer. As a result, experts in the financial industry say it\'s more important than ever for parents to warn teens about the dangers of credit card abuse .
A number of stores try to entice shoppers with offers of discounts for applying for in-store credit cards. However, what many young consumers might not realize is that possessing too many revolving credit card accounts can have a negative impact on your overall credit score.
Interestingly enough, the fastest group of individuals filing for bankruptcy is those age 25 and younger. Many of those consumers are landing in deep debt because of credit cards . It is a fact of modern life that credit card companies attempt to target teens, even though they need a parent to co-sign in order to obtain a card . The average student is offered more than a half-dozen credit cards . Therefore, it should come as no surprise that the vast majority of college students have credit cards .
It is interesting to note that most teens learn money management techniques from their parents . As a result, if parents rely too heavily on plastic, teens are likely to follow suit. That\'s why it\'s more important than ever for parents to teach teens good money management techniques, especially when it comes to credit cards. A good rule of thumb is for parents to wait to make purchases until they actually have the money to pay for them.
The deadline is approaching for college graduates to consolidate their student loans in order to take advantage of some special deals.
If students do not consolidate now, they\'ll be missing out on discounts that will end when the month of October begins. However, it is possible that graduates could secure even lower interest rates if they wait until July to consolidate.
Counselors are urging graduates to check out loan programs fully before signing on the dotted line. It\'s important that grads know exactly what benefits they\'ll miss out on if they don\'t consolidate before the end of September.
In other student loan news, Congress has approved legislation that will eliminate close to $21 billion in federal subsidies to student loan companies on new loans in October. As a result, lenders plan to cut out discounts for graduates when September ends.
For example, Sallie Mae has stated that it will no longer offer this incentive : a 1-point cut in the interest rate for borrowers who pay their student loan bills on time for a period of 3 years. The lender has sent notices to 43,000 borrowers, more than half of whom have decided on consolidation by the end of September .
Recently, the Federal Reserve reduced a benchmark interest rate which affects the rate for variable-rate student loans . Additional rate cuts may be on the way, which would mean that borrowers can obtain an even lower rate if they wait until the summer months to consolidate their student loans. In fact, some experts say that graduates may be much better off if they wait before consolidating.
Borrowers should also keep in mind that if you extend your loan through consolidation, you may end up paying more in interest over time . Therefore, while you may experience a short-term gain, you may ultimately face a long-term loss.
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