For students who struggle with paying for college, nothing sounds better than free money.

But all too often, credit cards are mistaken as golden tickets to instant wealth.

To help students learn how credit works, the University’s Department of Family Social Science is offering a new financial management class.

Cash or Credit: You Need to Know (FSoS 1301) is an online, one-credit class to teach students smart ways to handle a credit card.

“(Credit cards) can be a smart thing, but I think the number one danger is people thinking they’re free money,” Marie O’Malley, vice president of marketing for Nellie Mae student loan service, said.

“They don’t understand every time they use a credit card, it’s not free. It’s their responsibility to understand what it’s actually costing,” she said.

Course topics will include money management, financial goal setting, and laying out budgeted income and expense sheets, said professor of family social science Virginia Zuiker, who is teaching the course.

The semester-long course is offered to first-year students and sophomores. Thirty-eight students are currently enrolled in the class, Zuiker said.

A class about responsible credit is long overdue, Jennifer Klecker, University principal collections representative said.

“It’s a big problem, especially with incoming freshmen,” she said.

Credit card debt hurts students O’Malley said studies show credit card balances are increasing among students, giving them problems for the rest of their lives.

The average credit card debt among 2003 graduate students was $7,831, a 59 percent increase from the average debt in 1998, according to a study published in May by Nellie Mae.

The study also showed 96 percent of graduate students have credit cards, averaging six cards per student.

Klecker said the average credit debt for graduating college students is $3,000.

Living outside one’s means leads to problems, O’Malley said.

“Some people believe students are just doing what any other American adult is doing: carrying cards and using them to their advantage,” she said. “The problem is, most students aren’t working full time, and aren’t balancing their income against the debt they’re racking up.”

Charging tuition without sufficient funds is a common problem among students, she said.

“Even if you pay the minimum payment, like 2 percent, that won’t even cover interest,” she said.

But credit debt can sometimes be a good thing, O’Malley said. To pay for apartments or cars, she said, credit cards and their debt will be helpful when students graduate.

“Having some debt as long as you’ve managed it responsibly lets you borrow more money later,” O’Malley said. “Most places will be very shy about lending large amounts of money if you’ve never borrowed money in the past.”

Watch out for the fine print when getting a first credit card, O’Malley said. Students have to make sure they are not receiving a credit maximum they can’t handle.

“A responsible company will start you with $500,” she said.

Some cards also charge annual fees and fees to sign up, something not all cards require, she said.

Klecker said getting numerous cards is also a bad idea.

“Everyone wants a free T-shirt,” she said. “But then when you end up with five credit cards and lots of debt, who cares about the T-shirts?”

When getting a credit card, Klecker said, it is also important to look for a good annual percentage rate of interest – the interest rate applied to the balance on the credit card.

An annual percentage rate between 3 percent and 5 percent is considered good, and 7 percent to 10 percent is average.

Anything in the double digits is too high, and more than 20 percent is “really bad,” she said.