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If granted the power to see into the future, many college students would think twice before saying, "Charge it!" Had I seen what was to come, I would have handled my credit cards differently.

Credit card applications began rolling in during my senior year in high school. I didn't understand why credit card companies would want to do business with someone like me--a college student with no job and no credit history. Now I realize that the credit card companies thought I would do anything to pay off my debts, from begging mom and dad for money to skipping classes in order to make the money I needed. As it turned out, they were right.

During my freshman year in school I kept up payments on two credit cards and was master of my finances, meager as they were. I whipped out those cards with ease and handed them to the cashier. It felt great to walk out of a store with a bag full of goodies and my pocket as full as when I went in. Even though many of my friends were experiencing repercussions from misusing cards, I wasn't concerned. After all, I always paid my bills at the end of the month and I had acquired a part-time job. Little did I know how quickly the tide could turn.

The following year, when I was between jobs and used my credit cards to purchase my books, I got behind on payments. As a result, my interest rates shot up and my balance went over the limit, for which I was charged $30 a month. Since all I could afford was the minimum payment, I couldn't even begin to dig myself out of the financial hole I found myself in.

Five years later I'm still working hard to pay off the credit card debt I accrued in college. I didn't have to get into this situation, and neither do you. Will this happen to you? It all depends on your financial savvy.

Using Your Card Wisely
Although credit cards do possess potential danger, when used responsibly, cards can actually help you build a good financial history. Good credit history is important when it comes time to buy a car or house. On the other hand, bad credit history can label you a credit risk, which means no bank, landlord, or money lender will trust you to make payments. The difference between building good credit history and becoming a credit risk lies in using your card wisely. The following seven steps outline the beginning to a healthy financial future.

1. Be picky. Don't be so quick to fill out the first application that arrives in your mailbox. The first credit card offer you get may not be the best, and it certainly won't be the last.
2. Read the fine print. Knowing what you're getting yourself into when you say, "Charge it!" can help you keep spending in check. Take the time to read card information and call the company with any questions you may have (e.g., interest rates, annual fees, etc.).
3. Set limits. Control spending by getting a lower limit on your card than required. A $500 limit is generally plenty for most college students.
4. Make it inaccessible. Don't take your card with you everywhere you go. If your card isn't too handy, you can curb impulse buying.
5. Save it for an emergency. Consciously place a "For Emergency Use Only" label on your card. What constitutes an emergency? Car repairs you may need, perhaps--but a new pair of shoes? Unless you'll have the cash to cover it at the end of the month, you can probably do without them.
6. Plan ahead. Will you be able to pay a credit card bill in one month, one year, 10 years? If you don't know the answer, don't even consider making unnecessary charges. Also, consider the future possibility of having to handle both college student loan payments and card payments at the same time.
7. Pay it off. "Don't borrow more than you can afford to repay," advises Mike Kidwell, vice president and co-founder of Debt Counselors of America. By paying your balance in full as soon as the bill comes you can avoid paying accumulated interest.

Understanding Interest Rates
What gets most credit card users into trouble is the illusion that purchases made with credit cards are bought with free money. "It catches up with you," says Samantha Hank, a graduate student at Ashland University in Ohio, who now faces debts accrued in earlier college years. You do eventually have to dish out the cash for purchases made with a credit card. In fact, you end up paying more than you would have if you simply paid cash at the time of purchase. This is because credit card companies charge interest rates for purchases. As a result, your balance will continue to increase even when you aren't charging.

Example: Let's say you owe $500 on a card with an interest rate of 18 percent that's compounded annually, and can only afford a minimum payment of $20 a month. Even if you don't make additional charges, it will take about three years (32 months) and $135 in interest payments for you to pay off that card. Do you suppose that in three years you will still remember what you bought and are still paying for? "I can't think of any major purchases," laments Samantha.

Also, keep in mind that interest rates have a habit of changing. Some cards offer a low introductory rate that increases after a few months. (This information is usually found in the fine print.) A few missed payments can also cause an increase in your interest rate. According to Kidwell, "Mismanaging your money now can cost you more in the future."

Warning Signs of Excessive Use
If you are constantly putting off your credit card payments and have difficulty affording the minimum balance owed, it's likely your card spending has gotten out of hand. Another warning sign is when you find yourself using credit cards to pay day-to-day living expenses, such as grocery or utility bills. What Kidwell often sees happening is that card debts get so bad that college students miss classes, or worse, drop out of school in order to pay off bills. A piece of plastic should not put an end to your college career. Keep in mind that when you hold a credit card in your hand, you are holding your financial future--use it wisely.

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