{Money Journal} The Pros and Cons to Credit Card Upgrades

On a given week, my mailbox is flooded with credit cards upgrade offers that I immediately place in the recycle bin. It wasn’t until about a month or two ago that I received two separate offers that made me go hmmm…, maybe I should find out more. So off to the bank I went to speak with a representative about the Limitless Card and the Cash Back card.

The Limitless Card

The first offer that intrigued me was one the limitless card, known to me as the Discipline Tester. I sparingly use my card anyway, so a limitless card would actually help boost my credit score because it eliminates the debit to credit ratio for that card. There are several downsides to this type of card, though. For those who are not careful, the limitless factor could entice one to live beyond one’s means; thus, putting the cardholder further into debt. Another disadvantage to this type of card is the higher interest associated with the card… like say around 22%, which would skyrocket even more if you were ever late for a payment. In my opinion, this card is a NO GO!

The Cash Back Card

A cash back credit card is one that offers a percentage spent back to the card holder. It’s great because you can get money back for things you would buy anyway, like gas, groceries, and sometimes travel expenses. It’s also great, because you can have the cash received applied to your credit card bill, into a checking or savings, or in some cases applied to your mortgage. It’s downside- some people get so caught up in the cash rewards that they spend more than they were initially planning on saving. Therefore, you are basically spending money to get a deal…again, NOT GOOD!

Between the two cards, I did choose to upgrade to the cash back card. I found myself briefly falling into the spending trap of the cash rewards card. On a positive note, the cash back rewards seem to be accumulating much faster than the reward points system of my previous card and I will use that money to in turn, pay down my debt.  More updates to come as I feel how it is working out.

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Back to School: College Students, Banks, & Credit Cards

Good Morning and Happy Monday! With every week that passes the “Back to School” season is coming closer and closer into view. Parents are seeing the light at the end of the tunnel while students and even some teachers are dreading going back to the classroom. I have been thinking about writing a post like this for a while because I remember all too well the abundance of “FREE” t-shirts, water bottles, and even iPod nanos given to us students at Spelman College to urge us to sign up for credit card offers and bank accounts. Simply put, banks and credit card companies target students and what separates the students who kill their credit earlier on and those who become financially savvy adults is knowledge. What makes it ironic, though, is the idea for this post came from my own memories and experiences as a college student, only to have suspensions of credit card companies and banks confirmed Friday on a visit to Clark Atlanta University for freshman orientation.

Do Not Open an Account without Researching the Bank
I guess in this economy, banks have scaled back on their swag. I saw a few t-shirt being given out, some water bottles, a nice highlighter set, but no iPods (sorry students). Now I’m not saying credit card companies and banks are evil, you just have to know how to play the game. Banks are becoming increasingly aggressive when it comes to recruiting the business of college students. This can be used to your benefit with a little bit of research
and patience because the banks are presenting more competitive offering to beat out the other banks. College students and parents, if the bank cannot offer you FREE checking, FREE online banking, and most importantly for the student, no minimum balance, then walk away because another bank will.

Location, Location, Location
I remember taking a weekend with my parents to drive around the campus and surrounding areas of Hampton University in Hampton, VA. I figured I needed to know how to get to all of my favorite places like Target, restaurants, and the mall. My parents, however, thought it was important that I knew where the closest bank, grocery store, and hair salon (shout out to my mom for trying to maintain my whip appeal) were located. My advice for you is to get acquainted with the area. The bank from your hometown might not be available in the city where you or your student will be attending school, therefore learning the area is important in trying to find the best bank. Now let’s take a moment for the other factors that could influence your decision to pick a bank. Will you be a commuter or resident? Is there a bank already on your campus? Are there shuttle services offered to get you back and forth? Are there any banks located within walking distance? If you cannot physically get to a bank it doesn’t matter whether it is a great one or not.

Credit Cards and the Credit Card Act of 2009
Pay off your credit card balance in FULL each month. By doing this, it forces you to really stop and think about your purchases because resetting your balance each month causes you to buy only what you can afford. American Express, for example, makes cardholders pay in full. Think about it, it is a win- win situation because you don’t fall into the increasing numbers of consumers who are in serious debt due to credit card spending and they get their money on time. The College Board adds, “Credit cards are actually high-interest loans in disguise. Companies may lend you money, but they get it all back and a lot more by charging you fees. Finance charges on the unpaid portion of your bill can be as much as 25 percent each month, and cash-advance fees have even higher interest rates. Annual fees just to carry the card in your wallet range from $20 to $100; there are also late-payment fees, typically $25-$50. Not paying off the entire amount in your account each month can lead to big finance charges.”

It is important to know that a lot of the information written for students and parents about student banking and credit cards was written before President Obama signed the Credit Card Act into law. Now, credit card issuers are banned from issuing credit cards to anyone under 21, unless they have adult co-signers on the accounts or can show proof they have enough income to repay the card debt. That’s right; it’s not just the students’ credit score that is at risk. Bad financial decisions of students will directly affect the credit of their adult co-signer. The Credit Card Act of 2009 also stated that credit card companies must stay at least 1,000 feet from college campuses if they are offering freebies to entice student to apply for credit cards.

To be honest, I didn’t get a credit card until I was weeks before graduating from Spelman College. I waited because I was not sure if I could handle the financial responsibility that I had witnessed other fail. I knew I would already have to worry about my girl Sallie Mae and the student loans I was owe her, so I didn’t want to add the extra stress of credit card debt as well. It worked for me and yes, I recognize that every situation is different. Before applying for a credit card and/or opening a student banking account, do your research. A good starting place would be my 5 Non-Negotiable for Students and Banks. College should be one of the best times of your life so don’t taint it with worries over bad finances. Start smart, create great habits, and end on top.

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Reduce Your Student Loan Debt Class of 2011


Congratulations to the Class of 2011. That’s right, graduation season is here and for those who believe the world is going to end tomorrow, you are in luck! You see, dear ole Sallie Mae is coming for you 6 months to the day that you walk across that stage… but if the world ends, you don’t have to worry about student loans and the debt that comes with it, now do you? If I were as sure as others that the world is about to end, I would have chucked the deuces at my girl, Sallie in a heartbeat. Let me just say that student loans and the debt that comes with it are not all bad and while you could believe months from now that Sallie Mae is the devil, she doesn’t have to be. Think about it, Sallie was like your home girl, bestie, or fav from school who let you borrow a few hundred or thousand dollars here or there when you needed that new computer, housing, or were falling financially shy of your balance to register for class. She said, “Don’t worry about it; I’ll take care of it. You will pay me back someday”. Well recent graduates, someday is sooner than you think! She wants her money NOW!!!

Here are some steps that should help you adjust to the change in your relationship:

  • Don’t Fall for the Minimum Payment Game. If you can, always pay more than the minimum payment. The same rules for paying the minimum of credit cards apply here. You can do this one of two ways. For an entire year, I paid my Sallie Mae bill twice (the 15th and the last day of every month). Doing so, allowed me to get my payments a year in advance so while I was not working, my Sallie Mae bill was still current. One thing I would point out, that I actually forgot during my year off from paying Sallie Mae, is that interest accrues daily. If I had the opportunity to do it again, I would still pay twice but I would apply the first payment to current bill and the second full payment to the balance. That way, I will pay the balance down without wasting extra money on interest. Plus, doing this will shorten the life of the loan.
  • Find out if there is a pre-payment penalty for your loan(s). If there is no penalty, you should set aside some graduation money and start paying down your BALANCE before your official payments begin.
  • Consolidate. Consolidating your student loan(s) means that you take out a new loan to cover all of your old loans.
    Instead of have a bunch of different loans, you now make one payment that represents a combination of all of your student loan debt. No more multiple payments and due dates. Plus, you can take the lowest interest rate to apply to your newly consolidated loan, lower your monthly payments, and easily apply for alternate payment plans if your financial situation changes. As with most things, consolidating has its cons. Some have pre-payment penalties (mine didn’t), lowering your monthly payments could end up in extending the life of your loan, and there is the potential for more interest. Do your homework for this one- what works for one does not work for all.
  • Student Loan Debt is a good thing? Yep. Paying off your student loans is an excellent way to establish good credit. If you pay on time and pay more than the minimum, you will be well on your way to good credit. Visit, here, to learn other ways to raise your credit score.

Let us end this post on a fantastic note, congratulating the graduates of 2011. If you graduated this year, congrats to you as well.

Congrats to the Following Graduates

De’Jonique Garrison

Micki Jackson

Teraneshia Nash

Jay Cuyler

Cameisha Clark

Serena Rogers


Lauren Travis, JD

Christian Mitchell, MA

Tiffany Davenport, DPT

Akilah Bacy, JD




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