When should I use my credit card vs. debit card?

Many people are fear of using credit cards because of the risk of overdrafting, high interest rate and fraud. Some of these worries are not necessary. Nevertheless, when we need to swipe our cards, we should choose between credit card and debit card wisely depending on the situation.

Best situations to use credit cards:

  1. Shopping online: Credit cards are highly recommended if you are shopping online. Purchasing by debit card is just like paying cash. It is hard to get your money back once someone else makes a purchase by your debit card online. However, if you purchase by credit card, it is NOT like paying cash. Many credit card companies offer “zero liability” policies, which means that if you dispute a transaction within a few days that wasn’t authorized by yourself, you needn’t pay for it.
  2. Making large purchases: The credit liability policy also works pretty well for large purchases. In addition, some credit card companies offer warranty policies that go beyond the manufacturer.
  3. Making reservations, buying tickets: Many companies only accept credit card online reservations because of safety concerns. Also, it is possible to get discounts or cash-back when you use a credit card to make reservations.

Situations to use debit cards:

  1. Purchasing a small amount of goods: Debit payment is similar to cash payment, so it is more convenient to use a debit card to make routine purchases than a credit card.
  2. Automated payments: some types of payments can made automatically by using a debit card, which can make your life more convenient.

It is still risky to use a credit card without carefully planning. Nevertheless, using credit cards has a lot of advantages that debit cards do not have.

Written by Bowen Song, Financial Wellness Peer Educator, University of Illinois Extension, 2017.

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

What are some ways to reduce spending in college?

The first way to reduce expenses is to avoid making impulse purchases when shopping. People can be subject to impulse buying when they are upset, feel pressure from their peers, or even when an item is on sale. Before making a purchase, ask yourself if the item is something you need, if it will last for a significant amount of time, and if this item will off set your financial goals or budget. If the answer to these questions is anything that will make the item not worth purchasing, then don’t.

Another tip to help reduce spending is to keep track of your expenses with an app on your phone. Often times, mainly in college, we are too busy to write down a list of everything we have spent and this can make it very hard to manage our money. An app can make it very easy to track income and expenses to make sure you are living within your means. If you see that you are reaching your spending limit for the week or month, re-evaluate your budget to fit your needs.

The last spending tip is to take advantage of what your college campus has to offer. Instead of going out to bars and spending an excessive amount of money, spend time with friends in an apartment or dorm. Go to your campus gym instead of paying for a membership at a gym in town. Many stores and restaurants offer student discounts, so make sure to take advantage of your status as a student in regards to saving money. A great tool to reference that offers even more saving tips is the 55 Ways to Save Money handout that can be found by clicking on this link! http://web.extension.illinois.edu/cfiv/fwcollege/5402.html

Written by Jessica Rosenberg, Financial Wellness for College Students Peer Educator, University of Illinois Extension, 2017.

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

How can I lower the cost of my utility bills?

According to the U.S. Energy Information Administration, energy use for air conditioning has doubled since 1980, and U.S. households currently plug in more appliances and electronics at home than ever before. Natural gas and electricity are the most-consumed energy sources in homes as the home electronics market is constantly innovating new products integrating to our modern lifestyle. While certain appliances have long been standard in homes, such as refrigerators, stoves, and cooking equipment, owning other appliances like dishwashers, clothes washers and dryers has increased over the past 30 years. One reason for high utility bills may be due to unawareness of energy use that could be easily avoided. Although it is almost impossible to completely eliminate any of these three from your utility bill, there are several methods to assist in reducing utility costs:

  1. Turn off lights when you are not using them
  2. Unplug chargers while not charging
  3. Increase/decrease the temperature of your thermostat by a couple degrees depending on the season
  4. Use natural energy such as sunlight for lighting
  5. Wash clothes in cold water
  6. Hang-dry clothes instead of machine drying them
  7. Replace traditional incandescent bulbs with compact fluorescent light bulbs

Being aware of your energy usage may be the greatest step you can take to help lower your utility costs!

Written by Rex Wang, Financial Wellness for College Students Peer Educator, University of Illinois Extension.

Reviewed by Kathy Sweedler, Consumer Economics Educator, University of Illinois Extension.

How can I prepare financially for transitions while in school?

What’s up next for you?  A big move? An internship? Graduation? Marriage?

Unexpected costs can often be overwhelming and sometimes difficult to manage.  The busier we get, the easier it is to miss something or develop a bad habit.  It could be a bad eating habit or it could be a bad spending habit.  Both increase stress, which is the last thing you’ll want during that time.  So, take some time now to prepare so you don’t experience even more stress during what should be an exciting time!

Create or maintain savings.  Savings is often that last thing we add to our budget, if at all, but even setting aside $5 a week yields $260 after 1 year!  It can be hard to predict how much money we need during times of transition, which is why creating a habit of saving can reduce the burden if not eliminate it.  However, to prepare for a transition you can consider all the costs you know you’ll experience and use that amount, or a little more, to help set a goal.  Divide your total goal by the amount of time you have until your transition. For example, if you need $1,000 by September 2017 you’ll need to save $91 a month, or $3 a day.

You can use a savings account to separate that money and you’ll earn some interest!  Take a look at our blog post Why get a savings account? for more information about why savings accounts can be beneficial for you.

It’s easy to make split second decisions that can derail your savings goals.  If you don’t have a budget, this is a great time to make one.  If you feel comfortable and confident to make it on your own—great!  Stop by the Student Money Management Center’s website for tips and tricks to create a solid budget.

Written by Carol Brobeck, University of Illinois USFSCO Student Money Management Center.

How can I get help building a budget or spending plan?

Creating a budget and sticking to it is difficult for a lot of people, but there are so many tools you can use to both create a plan and track your spending that there’s no reason not to do it! Like with any other life skill, you just have to make it work with your own lifestyle, values and preferences.

Budget & Spending Plan Tools: Both the Student Money Management Center and University of Illinois Extension’s Financial Wellness for College Students have budgeting and expense-tracking resources for you to use.

Let us know if you have other questions about the best tools to use to build your budget and track expenses! You can even request an individual financial coaching session with the Student Money Management Center by completing this form or with the financial Wellness for College Students peer educators by emailing financial.wellnessuie@gmail.com to set up an appointment.

Be in the know. Stay updated on important events and activities at the University of Illinois to help build your financial future by subscribing to one of our e-newsletters. Each e-newsletter caters to your unique needs! Subscribe below:

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To learn even more about how to manage your finances while in college, including what to look for in a financial institution, you can watch another recorded webinar, Cash at College: Spending, Saving & Student Loans.

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