Credit cards can be useful financial tools, but they can also lure you into financial disaster. Too many young borrowers make mistakes that cost them dearly for years into the future. Apply the following tips to learn healthy credit card habits from the start.

Don’t Accept a Bad Deal

All credit card companies want to make profits, of course, but some do it in ways that seems tantamount to robbery. If you don’t have a credit history, you might be tempted to apply for credit cards all over the place — even if those cards come with outrageously high interest rates or annual fees. Apply only for cards you will actually use. Before you submit any applications, make sure you understand the card’s interest rate and whether it charges an annual fee. And don’t apply for a lot of cards. All of those applications go on your credit history as negative indicators, making it harder for you to borrow.

Don’t Overspend for the Sake of Getting Rewards

Rewards credit cards can provide you with cash back, fun gifts, and even vacations. However, you should never overspend just because you want to earn rewards. For example, if your monthly budget is $2,000, but have to spend $3,000 within a month to get a prize from your credit card, you’ll end up having to slowly chip away at that deficit — and pay interest on it. Your goal should be to pay the entire balance on your card each month. If you go into debt, make sure that it isn’t for frivolous reasons.

Check Your Credit Card Statements

Some stores don’t even require your signature for credit purchases if you spend under a certain amount, and how often do cashiers ask to see your ID? These practices are an open door for identity thieves. Learn about how to protect your sensitive credit card information.

No matter how diligent you are about safeguarding your credit card, however, it’s still possible that fraudulent charges will show up on your statements. Save your receipts and compare those receipts with your credit-card statement every month. Many credit and banking companies will monitor your card for suspicious charges, but don’t rely solely on their system.

If you have concerns about anything you see on your statement, contact the company immediately so they can put a freeze on your account.

Watch Out for Fees

Penalties for late payments are notoriously steep, so it is important that you pay your bill on time each month. You might even be able to set up automatic payments.

There are other credit-card fees you should watch out for, too. For example, there might be a charge if you want a card with a fancy design on it. There might also be fees for increases to your credit line, cash advances, balance transfers, foreign transactions, and going over your credit limit.

Don’t let the little piece of plastic in your wallet go from being a useful tool to a nuisance. Use your first credit card wisely, and you’ll set yourself up for a lifetime of good credit.

If you have a lot of debt to pay off, you’re far from alone. According to a report from late 2014, 40 million Americans have student-loan debt. Even though you’re still in school, there is no time like the present to start tackling your student loan debt — along with any other debt you might have. But how should you go about paying off your debts?

Know Your Debt

If you just make minimum payments on all your debts, you’ll end up paying far more than you have to on interest and it will take you decades to be debt-free. Take an honest look at all your bills. How much do you owe on each account? What are the interest rates? Are there penalties for prepayment? Having this information in hand can equip you to put together a smart plan for getting out of the red.

Choose Which Debt to Pay Off First

You should focus on paying off one debt at a time. This will ultimately save you money on interest and keep you focused on your financial goals.

You can choose to pay off your smallest debt first. Pour as much money as you can into the debt each month while you make minimum payments on all your other debts. After your smallest debt is paid off, roll the money you were using on it into the next debt. This will give you a sense of accomplishment as you quickly see some of your monthly payments disappear.

Alternatively, you can pay off your most expensive debt first. By focusing on the debt with the highest APR, you could save hundreds or thousands of dollars on interest.

As you slog your way through your debts one at a time, you might also put a little extra into the debts that aren’t your main focus. For example, if you use a credit card for a small purchase, you could promise yourself to pay off that small purchase immediately — and add a few extra dollars onto the bill. This will keep you accountable for your spending and make an impact on your overall debt.

Consider Consolidation

Student loans generally have low interest rates, so debt consolidation should only be an option for you if you have other, high-interest, unsecured debts. The consolidation will allow you to combine all of your monthly credit card payments into one. Your budget will be simpler, and you’ll save money on interest.

Choose a Career Path With Student Loan Forgiveness

If you’re still early in your college career, it might not be too late to choose a major that will lead to a career that offers student loan forgiveness. If you go into public service after you graduate — for example, if you work for the government or a nonprofit organization — you may eventually qualify to have your student loans forgiven.

Debt is a worrisome thing for most college students, but the sooner you put together a plan to pay it off, the less stress you’ll have later on. Choose a debt payment method that works with your situation and your budget.

When you’re living on ramen packets and you don’t know if you’ll be able to afford your next tank of gas, a payday loan can seem like a tempting way to get the cash you need right away. All you have to do is pay it back when you get your check, right? Stop right there. Payday loans are extremely dangerous.

Preying on Students

College students are often desperate for money, and payday loan companies prey on that vulnerability. An article in The Guardian states, “adverts for payday loans weed out the people they’re not interested in, until all they’re left with are the incredibly desperate or the young and unreasonably optimistic.” College students are a special target because of their unique circumstances. Of course you’re not dumb, but your circumstances may trick you into thinking that taking out a payday loan won’t have dire consequences. In truth, though, these loans are nothing but traps.

Shocking Interest Rates

According to, the average payday loan comes with an annual percentage rate (APR) of around 400 percent. Sometimes, the APR can be close to 800 percent. Your jaw is probably already on the floor, but to drive the point home, think about interest rates for credit cards, which usually have an APR between 10 and 30 percent. Credit cards seem like a bargain compared to payday loans!

Usually, you are expected to repay a payday loan with your next paycheck, as the name of the loan implies. However, you may be given the option of simply paying a finance charge and rolling over the loan into your next pay period. The more you do this, the more money you end up paying for nothing. This can turn into a debt spiral that will cost you hundreds or thousands of extra dollars over time.

Avoid Payday Loans

The best way to avoid getting trapped in a payday loan scam is to create a budget and stick to it. Anticipate the hard times, and set aside a rainy day fund for when you can’t work as much or when you have added expenses.

But what if you simply don’t have the means to set aside money ahead of time? You might think that if the choices come down to getting a payday loan or not eating, a payday loan is the lesser of two evils. However, you may have other alternatives.

Hit Craig’s List and sell some stuff you don’t need anymore. You’ll get cash, reduce clutter, and hook someone else up with something they do need.

Ask your employer about a pay advance. Many employers are flexible, and they want to please their loyal employees, so it can’t hurt to ask for a bit of an advance on your next check. Just don’t make a habit of doing this.

Another option is to take something valuable to a pawn shop and use it as collateral for a loan. It’s a quick way to get some cash, and you’ll be able to get your valuables back when you repay the loan.

Payday loans are scary — scarier than that horror flick that gave you nightmares when you were a kid — so avoid them by being smart about your budget and taking advantage of payday loan alternatives.

Whether school is in session or you’re on break, it’s difficult to find time to monitor your bank account. However, if you don’t balance your checkbook or check your balance online, you might incur overdraft fees by spending more money than you have in your account. Try these strategies to avoid financial penalties and other complications associated with overdrafts.

Set an Online Alert

Modern banks have adapted to technology just like businesses in many other industries. If you have access to online banking, you can probably set account alerts. You’ll give your bank a minimum balance, such as $50, and you’ll receive an email or text message if your balance dips below that threshold.

Account alerts can stop you from spending money you don’t have. As soon as you receive a notification, you can either put the kibosh on purchases or transfer money from another source into your bank account. You’ll avoid overdraft fees and perhaps develop more responsible spending habits.

Check Your Bank Account Once Per Day

If you don’t want to balance your checkbook manually, set up online access. Check your balance at least once per day. If you choose a specific time, such as first thing in the morning when you wake up, you’ll create a long-term habit. It will become second nature to check up on your balance, which will enable you to keep a closer eye on your finances.

Add a Backup Account

Most banks allow you to create a backup account for your checking account. You can use a savings account as long as you have money stashed in it, or you can link a credit card. If you accidentally spend more than the balance, the bank will automatically pull funds from the backup. Some banks charge for each transfer, though, so it should serve as your last resort.

Ask for a Waiver

If you accidentally slip up, don’t panic. Just about everyone experiences an overdraft fee at least once in his or her lifetime, so you don’t have to beat yourself up. If this is your first overdraft instance this year, call or visit your bank. Many institutions will waive single overdraft fees as a courtesy to keep customers happy.

You might also have an opportunity to negotiate for lower fees if you have several in a row. For instance, the bank might drop $10 or $20 off what you owe to make the hit more manageable.

Pay Fees Fast

Don’t let a negative balance chew away at your bank account. The financial institution will add new fees each week or so, which means you’ll continue to bleed money. Instead, pay off the fees right away, then use some of the tips above to manage your money more carefully. If all else fails, ask your bank to eliminate overdraft protection for your account. That way, if you try to spend more than you have, the bank will simply decline the charge.

Overdraft fees often plague college students who don’t always know how much they have in the bank. Recognizing the issue and taking steps to resolve it will help you create positive financial habits.