TGIF

It's Friday and time to unwind from your busy week. You may want to get off-campus to enjoy the weather, but are most likely short on cash. To help you plan your weekend we would like to provide tips on cheap eats and inexpensive activities around town, but we need your help. If you have a tip on a local hot spot or restaurant deal of the day let us know and we will post it.

We also wanted to take some time to follow up with those of you that have posed questions to Savvy Student. We have posted just a few of the questions below along with answers from our staff.

Debra wrote:

When I'm going through the airport different airlines keep shoving credit card applications at me. I've never had a credit card, and I'm tempted by the offers of free flights; how do I choose a good first credit card? Alternatively, I'm fine financially with just my debit card and like having all my purchases tied to the amount in my bank account so I know exactly how much I have at all times. My friend's parents got her a credit card so she could start building credit; is having a credit card really necessary?

Our answer courtesy of Nicole Bonanni, Assistant Director of Student Services:

Thanks for your question Debra. Credit Cards are necessary for establishing and building your credit history. Most big purchases are made with a bank approved loan instead of cash. If you decide to buy a car or house, banks will need to review your credit before approving the loan. If you maintain a good credit score in the range of 600-800, banks will approve the loan with a lower interest rate. On a purchase of a car, this could mean the difference between a monthly payment of $200 or one of $450. Having good credit is also important because many employers or rental properties will review credit history before offering employment or beginning a lease.

If you are looking for a 'good' first credit card choose wisely and do your research. A card with a lower interest rate is the best option. Many of the major card companies such as Visa, Mastercard or Amex have rates around 16-18%. Beware of store credit cards, as they often have rates much higher. You mentioned that credit card offers with promises of free flights tempt you, but again just do your research. If a card offers benefits that you will use take advantage of them. If you treat a credit card like your debit card and account for each purchase then you should be all set. If you do decide to apply for a card, be sure to pay your balance down, paying more than the minimum each month. Ideally, you will be able to pay off your balance immediately, but if you do get in over your head do not be afraid to contact the company and ask for help. Hope this helps, best of luck to you!


An anonymous Brandeisian wrote:

If the only loans I have to pay off are my Federal Stafford and Plus loans does interest accumulate based on the principal or on the debt owed? Does that mean that the amount of interest added once each year is the same no matter how much is added or taken away?

Also, I understand it's just a good idea to pay off debts in general when you can, because one may not know what one's financial situation and interests look like years down the line.

Our answer courtesy of Steven Doona, Assistant Director of Student Loans and Collections:

The loans most often seen in a student's loan history are Federal Stafford Loans ('Subsidized' and/or 'Unsubsidized') and Federal Perkins Loans. These loans require no repayment while the student is in school or during the initial grace period (6 or 9 months, respectively). Also, during the grace period no interest is charged to the student on the Subsidized Stafford Loan or on a Perkins Loan. Unsubsidized Stafford Loans, however, do charge interest while the student is in school, but require that no repayment be made. Instead, interest accrues and is 'Capitalized' (interested accrues on interest). So, if you have an Unsubsidized Stafford loan, the interest is being capitalized while you are in school and the amount of debt added each year is also increasing.

There are two kinds of PLUS loans: Graduate and Parent. If you are a graduate student, the Graduate Plus Loan has similar terms to the Unsubsidized Stafford except it has a different rate of interest and a larger fee attached to the loan. If your parent has taken out the Plus loan, the interest is also capitalized. Notices are sent from the Department of Education quarterly to show how much interest has been charged on all Unsubsidized loans.

For any other questions about loans, please feel free to contact Savvy Student via email at sfs@brandeis.edu. As an additional resource, the Brandeis Loan Office is available to all students, faculty and staff (even if their student attends college elsewhere), and we'll be happy to assist you with your specific questions. Email, call or stop by!