Why
Student Loans Are Better Than Credit Cards
by: Vanessa McHooley
You need
some more money for college expenses this semester. Do
you whip out a credit card to pay for your books, or do
you apply for a federal or private loan? Well, consider
the options
-
With
a federal loan, your interest rate will be low
(around 5%) and your payments will be deferred until
6-9 months after graduation.
-
With
a private loan, the interest rate will be slightly
higher than with a federal loan but will still be
lower than average. In addition, you will only need
to make interest payments until after graduation.
-
With
a credit card, on the other hand, the interest rate
can be as high as 21%. Interest begins accruing
almost immediately, and you need to begin paying off
the bill the next month.
This is
not to say that credit cards do not have a place in your
college life. It is good to have one national card
(Visa, MasterCard, Discover) on hand to help you build a
positive credit history and to provide security in
emergencies. When you decide to apply for a card,
compare annual fees, interest rates, and introductory
offers. And to keep yourself out of debt, try to
-
Pay
your balance each month to avoid interest charges
-
Pay
your bill on time to avoid late charges
-
Avoid cash advances, which come with large finance
charges and interest that begins accruing
immediately.
This
article is distributed by NextStudent. At NextStudent,
we believe that getting an education is the best
investment you can make, and we're dedicated to helping
you pursue your education dreams by making college
funding as easy as possible. We invite you to learn more
on how Student loans are better than credit cards at
http://www.NextStudent.com.
