For most students, college is their first time away from home. It can be the first time they are doing everything on their own. It is also usually the first time they will obtain a credit card. For a population who has high expenses and low income, it’s easy to fall into credit card debt.
College students can have big monthly bills from cell phones to living expenses. If a college student fails to plan ahead, putting tuition on the credit card is an easy short term solution. But bad habits as a young student can cause a lifetime of credit card debt. A poor credit history can follow a student as they try to qualify for other loans too.
Many college students rationalize the credit card debt by thinking they will get a good paying job when they graduate. They fail to consider the demands of student loans, car loans and the high cost of living that all come after graduation. Often, the balance on the credit card just doesn’t get paid and the high interest rate keeps adding up.
There are some bright spots when it comes to college students and credit card debt. The Credit Card Act of 2009 has made it a little harder for students to get a credit card. USA Today reported that the number of students opening credit accounts in 2012 was around 14 percent compared with 33 percent in 2007. Today students aren’t lured in with free stuff and aren’t easily approved. They have to put down a deposit or get an adult to cosign with them. The cosigner is now responsible for the credit card debt if the student fails to pay and that person can be an extra set of eyes watching what the student spends.
But overall, credit card debt is still a big problem among students. According to CNN Money, in 2013 college students owed an average of $3,000 in credit card debt when they graduated. That credit card debt is more likely to grow than to be paid off as they get older. Ohio State did a study showing people in their 20’s and 30’s owe on average $5,000 more in credit card debt than their parents did at their age. It also shows the younger generation is slower in paying off the debt. It becomes a fixture in their life.
The best way to avoid the credit card debt trap is to manage it early. Even if the credit card debt is overwhelming, a plan to pay it off keeps students from accumulating more debt and helps get it under control.
It’s also a good idea to have goals along the way. Reaching milestones will help keep young people on track especially when they face temptations. One of those goals can be to qualify for a credit card with a low interest rate. Eventually the balance can be transferred to the card and fewer dollars will go to interest with more going to bringing down the balance. The lower interest can keep credit card debt manageable for years to come.
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