The Community Initiative fully advocates for increased financial resources for its most financially vulnerable students, and will work to its furthest extent to realize this change structurally. However, occasionally students will experience a personal emergency which requires more immediate funds or financial help. The following options are more a reminder for what options still exist; explore options already presented in other pages, and talk to a mentor and dean before considering the following options.
If you have a large expense looming that you will not be able to meet with your current income/savings, consider taking out a Federal student loan. Student loans do not charge interest while you are in college, charge much less interest than credit cards, and have extended payment plans. A modest loan, used for a specific purpose, may save you from going into a cycle of long-term credit card debt.
Credit cards are best used to bridge short-term cash flow gaps. For example, a student needs to buy an airplane ticket several months before they travel in order to save money on the ticket. They don’t have enough in their bank account to cover the expense right now. Using a credit card to buy a $300 ticket and then paying it off the following month or in the next three months at $100/month plus interest can be a responsible choice.
Keep in mind that credit cards usually charge relatively high interest rates: up to 19% per year. Any card that charges more than this upper limit is predatory and should be avoided. Many credit cards charge lower rates, and may give a lower introductory rate that then rises after 6 months to a year. Choose a credit card through a thorough and informed search—don’t just take the first card you are offered. Read the entire credit card agreement, noting whether rates are fixed or variable, when introductory rates are set to rise, credit limits, and fees. You may find it easiest to have a credit card from the same institution that you bank with. When deciding on a credit card, always look for the lowest-interest option with the minimal amount of fees. For further guidance on responsible credit card use as a college student, consult this advice from Consumer Union.
Credit cards should always be used judiciously. Don’t use a credit card for every day expenses like food or entertainment, as this can increase your balance more quickly than you think. Instead, use a credit card for a specific purpose and limit what you plan to spend so that you can pay off the balance within a few months. For example, a student might use a credit card to pay for books in January because of unexpected travel or emergency expenses during winter break. The student would plan only to put books on the credit card, and include payments in their budget to pay off the bill by May. Always make a plan for paying off the credit card balance as soon as possible, and stick to the plan. Pay more than the minimum balance due. Always pay credit cards (and other bills) on time. Missing a credit card payment can result in large fees and/or increased interest rates, and can hurt your credit score, which will be important for renting an apartment and other post-college transactions. Carrying a large balance can also drag you down financially for years to come. If you have an especially difficult time limiting your spending (including due to anxiety, depression, or bipolar disorder), it is best to avoid credit cards all together.