August 2003 - Making Cents Credit Card Tips for Teens Before your teen heads to the mall or off to college with a credit card, make sure he or she understands the math. Here are seven basic truths that every teen should be taught before being allowed to say, "Charge it": 1. Credit card purchases are not free. A bill will be forthcoming and payment can be expected in 25 days or less. With a credit card, you are buying now and paying later. Each purchase is like taking out a short-term loan. 2. Credit card officials are keeping score. Credit bureaus grade consumers on how quickly they make good on their debts. Paying bills promptly helps establish good credit scores so that you can get good interest rates on car loans and home mortgages later. 3. There are cheaper ways to get a T-shirt. A free T-shirt or a frisbee is no bargain if you have to sign up for a credit card with a $25 annual fee, interest rate in the high teens and a short grace period. Don't be sucked in by "freebies." You'll wind up paying a far higher price than the worth of the "gift." 4. Credit cards are not all the same. Shop for the best credit cards available. Learn what an annual percentage rate, a grace period, a spending limit and other credit card terms mean. Afterwards, go to Web sites like www. bankrate.com and www.cardweb.com to compare rates. 5. Carrying a credit card balance is costly. Once the grace period is up, interest is assessed. For example, if you charge $1,000 on a credit card with an annual rate of 17 percent and make only the minimum payment of $25 or 2.5 percent, you could ultimately pay almost $1,000 in interest. 6. Credit cards are helpful during emergencies. It's hard to budget for unplanned expenses like a car repair or a last minute airplane ticket for family emergencies. When possible, pay your balance in full to improve your chances of being approved for credit during unplanned events. Also, as a rule of thumb, only charge items you can pay off in 90 days. Otherwise, a small problem can turn into a big problem because of compounded interest. 7. Help is available. Let your teen know that he or she can come to you with credit card problems. If money management and credit problems continue, you can recommend contactimg Consumer Credit Counsel-ing Services (CCCS), a nonprofit, community-based organization that helps people manage debt by setting up a budget and payment plan for them. The CCCS can help you set up a budget and payment plan. The CCCS can also assist by getting interest rates lowered and eliminating late-payment and over-the-limit fees. Information courtesy of Consumer Credit Counseling Services of Savannah (CCCS). For information, call the Hilton Head office at (843) 689-2227.