College student credit cards have replaced student loans as a freshmans first student credit experience. At the sophomore level, out of a sample of 100 students, over 90% were found to be holders of at least one college credit card. The question is why do many students find themselves in a vicious cycle of debt with their college credit cards? Why are so many students astonished with the huge bills they receive each month? Most importantly, must it necessarily always be this way for a college credit card user or is there a simpler way?
There are plenty of statistical indicators to suggest that students run up credit bills regularly yet they do not pay their monthly dues on time. Approximately 21% of college credit card users have balances between $3,000 and $7,000. The number of credit cards in an average students possession keeps increasing, indicating that they might be acquiring new cards to pay off balances on old ones. However, this can lead to credit balances increasing even faster, adding more debt in this never-ending downward spiral.
Five Steps to Avoid the College Credit Card Debt Trap
The core reason of this pathetic plight is the absence of a disciplined and planned system of using credit. If you, as a student, wish to optimize the use of your college student credit cards, use the following guidelines to plan credit spending and you will not go wrong:
- Pay up on time. Late fees are the most unnecessary source of debt accumulation. Ensure that you always meet the minimum payment on your bill. Ideally, you should try to pay more than the minimum amount to reduce overall charges.
- Use the 20/10 rule. Be careful that you never, ever borrow more than 20% of your annual net income and never spend more than 10% of your monthly income on your monthly payments. In other words, balance your credit to avoid irregularities in monthly payments.
- Plan your credit expenses. With college credit cards at your disposal, it is easy to give in to the temptation of impulse purchases. This leads to escalating card balances and higher and higher payments over a long period. It is ALWAYS better to plan purchases on your college credit card for so you can ensure you only build up credit balances that you know you can easily pay off.
- Avoid taking cash advances. The finance charges for these are generally higher than if you were to make credit purchases.
- Avoid approaching your credit limit. There may be extenuating circumstances that will require you to make unplanned expenses. So overall, if you stay clear of the credit limit by avoiding unnecessary charges, you can have the mental satisfaction of knowing that you can comfortably use the credit when it is really needed.
The Boon or Bane of College Credit Cards
If these guidelines are kept in mind, you will find you can live comfortably with college student credit cards. These tips are especially useful if you see yourself opting for that extra job in order to pay your credit card bills. Your savings are precious so dont bring yourself to a point where you need them to bail yourself out of your credit-happy ways. A balanced budget is the best way to handle all your expenses. College credit cards are most certainly a boon, and yet they can become a bane if you are not careful.
Tags: College Credit Cards, College Student Credit Cards, Core Reason, Credit Balances, Credit Card Debt, Credit Card Users, Credit Experience, Debt Accumulation, Debt Trap, Downward Spiral, Five Steps, Irregularities, Late Fees, Minimum Payment, Plight, Sophomore Level, Statistical Indicators, Student Credit Cards, Student Loans, Vicious CycleDebt is one of the most common and devastating things that people find themselves in life. It saps your energy and decreases your control over the future. Basically you are a slave to your debt literally and it has a way of winning out. People get into debt for all sorts of reasons. Some make poor decisions but most people are just plain unlucky and get hit with an unexpected and huge bill at just the wrong time. The great thing is that many of the people who offer debt help have been over their head in debt before and know exactly how to get out from under that crushing load. They know that you aren’t stupid and will treat you with respect as they lead you along the proven path to freedom in your budget once again.
So my advice to you, if you are just starting the downward spiral and want help avoiding compounding your errors, or you have already hit rock bottom and are desperately looking for a way out, get someone you can trust and who knows what they are doing to give you good debt help. What I want to do now is give just a few tips that any sensible debt advisor would give you to get you on your way to financial security.
First form a budget that fits your income and stick to it. This is the most simple thing to teach in debt help, but turns out to be the most powerful because people have never learned. People have no idea how much is coming in and how much is going out and absent mindedly spend more than they make. It is a natural phenomena and the only way to avoid it is to map it out clearly so you can see the effect of your decisions clearly.
The second tenet of debt help is that everybody needs to come up with a way to keep track of your budget on a day to day basis. How else are you going to know if you can make a purchase within your budget? You need to have running totals in order to stick to your budget. There is a lot of simple computer software that is getting easier to use each year as they figure out ways to automate things. This takes out all of the math that can screw people up and also provides a clean crisp organization for those who are challenged organizationally.
Third credit can be your friend but turns out to be most people’s enemy who are seeking debt help. Credit gives you flexibility and often many incentives but it also is very expensive if you get on the wrong end of the equation. My advice to you is to first not have credit until you have disciplined yourself enough to stick to a budget and then only use it like you would a debit card. This allows you all of the positives of credit without burying you alive.
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