Help your college student get credit-card smarts

Here is a puzzler your college-age student might not find in a math textbook: How many months will it take to pay off an $8,000 loan, assuming you're being charged

18 percent interest and you're making payments of $150 a month to whittle down the balance? The not-too-pleasant answer: 108 months. Think about it: nine long years of handing over your hard-earned dollars to the bank.

That's a credit-card calculation any prospective or current young cardholder should crunch as a reminder of what can happen if spending with plastic gets out of control If you have a young consumer who is clamoring for a credit card or has recently received one, make sure he or she checks out two new online tools that provide crucial, teachable credit-card management lessons.

The newest is Help With My Credit, a comprehensive program launched in late January by a group of financial institutions and credit-card issuers, including Citigroup, Bank of America, MasterCard and Visa. The program provides a toll-free telephone number (866-941-1030) for credit-card customers to contact counselors who can work through plastic and other debt issues.

What I found most useful for students was the group's Web site, www.helpwithmycredit.org. The site is packed with basic information on how to select a card, features and benefits of various cards, fraud tips and a credit card payment calculator. I plugged into the calculator for my example of what can happen if you don't pay your card balance in full every month and roll up more debt.

Bill Hardekopf, who runs the Lowcards.com Web site, said the Help With My Credit program is a good tool for young consumers "who are overwhelmed or struggling with debt and don't know what to do." Lowcards.com also is loaded with information to help consumers sift through credit-card options.

There's another important piece of any discussion about plastic, and that involves credit scores. That's why a new credit score estimator tool is worth checking out on CreditCards.com.

The tool leads you through 10 questions to get your approximate credit score range. Your credit score tracks your credit payment history and rates your ability to responsibly handle credit.

Why would this matter to younger consumers just starting in the credit world? Because your credit score can affect your ability to obtain a mortgage, finance a car, apply for future credit cards or even get a job.

While the program doesn't provide an exact score of a borrower's creditworthiness, I took the quick quiz and my score turned out to be accurate, for the moment.

In addition to these online indoctrination programs, sit down with your student before he or she goes off to college and explain the credit facts of life -- the difference between debit and credit cards, reward cards, teaser rates and late-payment penalties.

Recently, I spoke to a group of students at the University of Kansas about using credit cards wisely. I recommended avoiding marketers who routinely show up on campus at the start of the year offering T-shirts, pizza coupons and other freebies in exchange for applying for a credit card. These offers should be refused because the cards generally come with high interest rates and other undesirable terms.

Sure enough, one freshman student in the room said he had succumbed to the freebie offer and within a couple of weeks, the credit-card applications started landing in his mailbox back home.

Fortunately, he had no interest in following through on the offers.

For many students, however, a lack of credit-card smarts may cause regret -- and serious debt buildup down the road. Talk about an expensive number crunch.

E-mail Steve Rosen at srosen@kcstar.com.