Credit card debt management for college students

credit card managementStudies show that college students are under the illusion that credit cards are free money; unlike mortgages, car payments, or student loans, credit cards with their high interest fees and rates is bad and expensive debt. The average college student today has four or more credit cards!

Another myth is students believe they need credit cards to build a credit history. Students can establish good credit by signing up for accounts with services and utilities – such as cell phones, cable, electricity or heat. It only takes six months to establish good credit.

There are fees for the privilege of credit. When you purchase an item on credit, you will pay more than if you purchased the exact same item with cash. Remember, the creditor makes money by charging interest each day that you carry an outstanding balance.

Also, don’t fall for credit card “teaser” rates or low, introductory rates. Those rates are temporary and serve to lure you to apply for that credit card. When you make the minimum payments, you may end up paying two times or three times as much for that item you bought. It would take you years, depending on how much you owe, to pay that card off. Try to pay your credit card balance in full and if you can’t pay the balance, then pay more than the minimum.

Take charge of your debt. Determine how much is owed, when payments are due, and what the finance charges are. Pay your credit cards on time, missed or late payments can result in costly late fees, higher interest rates (28%-30%), and negative marks on your credit report. That is not an illusion, but reality.


Credit Advice for Students