In the busy and stressful lives of American college students, spring break is often seen not only as a break from daily reading and problem sets, but also as a break from the prudence and moderation necessary to be a model student.
But while the fuzzy memories of drunken debauchery mercifully fade over time, the financial hangover can be much harder to escape. Mitchell Weiss, an author and 35-year veteran of the financial services industry, began teaching a course on financial literacy at the University of Hartford six years ago, and has seen students come back from spring break with a mountain of money problems to deal with.
“I’ve had students come back and talk about every type of problem imaginable,” he says. “They’ve been ripped off, overspent, misunderstood promotional offers or mismanaged group payments. By far the most common issues though are overdraft charges and ID theft issues.”
Responding to what he saw as a lack of information for students, this year he published Life Happens: A Practical Guide to Personal Finance from College to Career, which he now uses as the blueprint for his class.
He shared some of the most common mistakes young people make that can turn spring break into spring broke.
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Paying Overdraft Charges
Nobody wants to ruin a spring break experience with an OD. And we’re not talking about drugs here, but rather the bane of every low-net-worth individual: overdrafts. The biggest culprit, for Weiss, is overusing debit cards, which are subject to holds that tie up money in users’ bank accounts even if they don’t end up spending much on a particular transaction.
“I hate debit cards. I really, truly hate them,” says Weiss, who points to gas stations and hotels as the most problematic of merchants. “You go to a hotel and give your debit card to hold the room and they will put a hold on your account for everything they expect you to spend, including the minibar. Or when you first swipe the card in order to pump the gas, the machine doesn’t know if you’re filling up a Harley or a Mack Truck. These ‘holds’ may then take as much as a day to clear. ”
As long as these holds are on your account, any auto payments you have set up or checks you have written previously could easily send your account into negative territory and slap you with an overdraft fee. Thankfully, Weiss points to an easy way to avoid the problem: Use a credit card.
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Overusing the ATM
It’s important to remember that good financial behavior at home still applies when you’re on the road, and in most cases it’s even more important, Weiss says.
“There is a lot of advice out there that people should use cards because if you have money in your pocket, you’ll spend it,” Weiss says. “But when you’re going to the ATM all the time you open yourself up to spending more than you intended, you put yourself at risk of fraud every time, and you forget to keep records.”
Some banks even charge fees for making too many withdrawals in a month, and when you’re out of your home area the chances are much greater that you’ll occasionally have to visit unaffiliated ATMs that charge their own fees and expose users to fraud.
The solution, as Weiss said earlier: Use a credit card.
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Buying the Package Deal
While discount travel websites are certainly a convenient way to book an all-in-one travel experience, that convenience often comes at a cost. With a bit of legwork, Weiss says, you can build your own vacation package and often get a better rate.
“If you go on Expedia or something you’re stuck with non-refundable fares,” he says. “Their prices can be good but they want to lock you into the fare on that day.”
Instead, he recommends shopping around and even making multiple reservations, especially with hotels or cars, and then calling right before the no-penalty cancellation period ends. Sometimes a better fare becomes available as the date nears and the company wants to avoid a vacant room or idle car.
“They know that since you aren’t past the deadline, you can always switch hotels,” he says.
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Not Changing Money at Home
Spring breakers who choose to live out their debauchery in Cancun or some other foreign country leave themselves open to plenty of other money wasters that domestic travelers don’t need to worry about, and they mostly fall under one simple category: foreign transaction fees.
While the dollar can get you a long way in some countries, the fees and exchange rates you get if you wait until you land to convert your dollars will never work in your favor, Weiss says. “If you’re taking cash with you it’s always best to do it before you go. The conversion rate at your home bank will always be better.”
Of course, since most people probably don’t want to take all the cash they will need while abroad, they may be tempted to visit ATMs to replenish their supply, but those will slap you with a number of fees as well, including foreign ATM fees and currency conversion fees. The best way to avoid those, as MainStreet has reported before, involves using a no-fee credit card or at least one that will earn some travel rewards to use in the future.
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Using Your Phone as Usual
Another problem that foreign travelers encounter frequently, especially students who travel in groups and need to make sure they know where to meet up at meal time, is forgetting to change your cellphone plan to one that supports international activity.
Most wireless companies will allow you to activate a temporary add-on to your monthly plan for less than $10, so that you avoid paying any international roaming charges whatsoever, but that’s not the only option. MainStreet looked into this question before and found plenty of other ways to avoid a massive cellphone bill after a trip, such as renting a phone or just buying a local SIM card on arrival and using that in your phone to take advantage of cheap local rates.
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Paying Full Price
No matter where you travel, you should always check for any discounts that might be available to you but not advertised. The most obvious of these for spring break travelers – the student discount – is not always clearly stated on a company’s booking page.
Weiss suggests checking for AAA, student discounts and any deals associated with a frequent-flier membership you have, since hotels and car-rental companies often have partnerships with them. Another strategy he suggests is investigating whether a parent can use a corporate or AARP discount to book a reservation for you, and you can just pay the parent back.
The least you can do, Weiss says, is avoid non-refundable reservations.
“When they say the rate is not refundable, just tell them you’re not ready to commit because you haven’t done all the research yet,” Weiss advises. “They might come back immediately with a better offer but otherwise you can look first and try to get a discount just before the cancellation period.”
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Not Protecting Personal Information
These days everyone from online retailers to utility companies to the charity you donated to last Christmas has identifying details about you, and with all the leaks that have happened in recent years, it’s a good bet that your data has probably already been stolen.
Still, fraud and identity theft are some of the most common, and most easily prevented, ways that young people see their finances damaged – especially while traveling.
“I see so many students talking on their cellphones and giving their whole Social Security number and date of birth to people on the other end of the line,” Weiss says. “Cellphones are not secure to begin with, but anyone listening can unlock everything, and public Wi-Fi like you would use in an airport is a huge risk. Putting passwords and other info on publicly accessible networks is almost inviting people to take advantage of you.
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Greg Emerson is a writer/editor for MainStreet. You can reach him by e-mail at firstname.lastname@example.org , or follow him on Twitter at @emersongreg.
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