Common Credit Card Pitfalls for College Students
College Students in Credit Card Debt
College students are racking up a large amount of credit card debt at an alarming rate. On top of college debt, the average undergraduate student carries thousands in credit card debt and by the time they graduate from college, starting the “real world” in the negatives.
With advances in civilization and technology, this generation was conditioned for instant gratification. In other words, they only care about the short run, so they’ll end up racking up debt thinking it’ll be easier to pay it back in the future due to a raise or a higher paying job. This is often not the case. Lower-than-expected salaries, plus higher-than-expected living expenses on top of hefty student loan payments, makes managing credit card debt more difficult.
College students have so much credit card debt it takes too long to pay it off. If students are able to make the minimum payments, it would take them more than 12 years and $1,115 in interest to pay off a $1,000 bill on a card with an 18 percent annual rate. If students fall behind in their payments, they get slammed with high late fees.
Of course, there are two sides to this story. Most college students start out with little and even no credit, so having a credit card seems like a good idea so they can start building a credit history in anticipation of owning a new or better car and even, someday their own home. Except if they haven’t been warned of the dangers of using credit cards.
Credit card debt for college students affects many aspects of their lives. They can’t pay their bills regularly and find themselves short of cash. Plus, it can affect their ability to secure a student loan which can be crucial with ever-rising tuition rates. Parents should beware of putting their college student on their own credit cars as an authorized user as the same debt can pile up under the parentsí names and cause some serious credit problems.
Armed with the right information, many students are able to establish credit and steer clear of card debt. Even though college students do carry credit card debt, 54 percent of college students pay off their credit card balances every month.
Most tend to be responsible and use the card wisely.
However, some of them don’t and they’re getting into trouble. If a person makes it through 18 years of life without any financial wherewithal, it’s very difficult to change their behavior and that’s why it’s so important that parents speak to their children about money management. To keep a college student out of credit card debt, the key is teaching students money management skills before handing them a credit card.
If you are a student who is in trouble and in need of credit repair, please don’t hesitate to get our free consultation. We have a special department for students who carry a lot of debt and need advice managing their credit.