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Credit Cards and Debt

Statistics and facts on student credit card debt.  Learn how to avoid college student debt by using these tools to keep your credit card balance low and pay the least amount of interest through low apr credit cards.

One of the easiest things for college students to do is to get a credit card. Credit card companies send representatives to colleges and universities across the country, luring students with the promise of easy money and free merchandise just for applying. And, according to Nellie Mae, students are responding. Here are some numbers that Nellie Mae reports regarding students and credit cards:

• 56% of college undergrads get their first credit card by the time they are 18.
• By the final year of undergraduate study in college, 91% of students have at least one credit card.
• By college graduation, 56% of students have at least four credit cards.

Credit cards can be very helpful in establishing credit, but they can also lead to crippling debt in not used wisely and responsibly.

Student credit cards promote debt

It is true that credit card companies view college students as great ways to make money. They rarely consider the consequences of using student credit cards, and quickly rack up the debt. Then they spend years repaying the debt, with the final pay-off (thanks to interest charges) amounting to double or triple the original money borrowed.

Here are some statistics on student credit cards and debt:

• Student Monitor reports that the average balance for students who don’t pay off their credit cards each month is $452.
• Demos reports that credit card debt has increased by 11% amongst college students in the 18 to 24 age group.
• Demos reports that almost 20% of college students are experiencing “debt hardship.” This number is up from the 12% reporting hardship in 1989.

Student credit cards are easy to use, and it can seem like no time before students realize how much debt they are in. Adding to the possibility of problems is the fact that credit card companies are quick to raise credit limits if a student makes regular payments on the card they have already. It can be a heady experience to watch your available credit climb from $500 to $850 to $1,000 to $2,000. And the more credit is offered, the greater the chance that a student will get into debt.

Avoid becoming a victim of student credit card debt

It is important to use student credit cards in a responsible manner. This will help you avoid getting into debt that you have difficulty paying. It will also help you keep a good credit history and help you build your financial reputation. Here are some tips to help you avoid running up debt with a student credit card:

Shop around. Do not sign up for the first credit card that comes your way. And do not sign up based on the “free gift” being offered. Instead, comparison shop for your student credit card. There are companies that offer credit cards just for students, and these can be good ways to get better rewards and learn more about responsible card use. Look for such items as low interest rate, introductory rates, no annual fee, low balance transfer fees, lenient grace periods and good rewards programs.

Stick to a budget. Budgeting is an important part of financial responsibility. When you have a credit card, you should still use a budget. Consider your credit card as tool, rather than additional income. It is important to realize that, far from being income, a credit card is a loan. This means that you should not put anything on your credit card that you couldn’t pay for out of your checking account immediately.

Pay your balance every month. This goes along with the previous tip. When you pay off the balance each month, you will stay out of debt, since you will not be racking it up. Additionally, you won’t have to pay interest charges. And when you pay interest, you are doing nothing more than paying money to someone else, without getting goods. Paying the balance each month will help you stay out of debt.

It is important to establish credit. It is also important to learn how to manage your money properly. Credit cards can be a great financial tool to help you. However, if you do not use it carefully, and if you are irresponsible, you will find that a student credit card results in debt that is difficult to pay off. But you should be careful to stay out of debt and use credit as sparingly as possible.

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