Student Credit Card Debt

Kids go to college in the United States in search of a degree that will help them land a good job and ensure a high standard of living throughout their lives. Unfortunately 18-22 year old kids are not known for being financially responsible. Credit card companies know this and they do everything they can to get their cards in the hands of this large, irresponsible demographic. 84% of college students own at least one credit card and half of these college students own at least 4!

The average college student owes $3,000 one their credit cards, this is just the average, not an extreme case by any means. The sad thing is students are not racking up credit card debt to pay for tuition or books. Most of the debt accumulated comes from food [not the free kind most students have access to in dining halls], clothes, and “nights out”. Credit card companies are to blame for this problem, but students should not get off “Scot free” either, they are the ones who ultimately make the irresponsible decisions.

The easiest way to handle student credit card debt is to avoid it in the first place. Whether you are a student now or you are a parent of a college student it is important that the student knows how serious credit card debt can be. Not only will you owe $3,000 to the credit card company, on average, you will have to pay back interest, fees and your credit score will be negatively affected. When a student graduates from college he/she generally wants to buy a house and a car, it is very tough to get approved for auto loans with bad credit and it is almost impossible to qualify for a mortgage of any kind if your credit score is terrible and you owe thousands of dollars to your creditors already.

If you are already in credit card debt as a student you are “behind the 8 ball” so to speak, but there is a way out of it:

The first thing you need to do is cut off spending entirely. Do whatever you have to do to stop racking up charges on your card[s]. If you have to put your credit cards in a safe or cut them in half you should do so. You cannot become debt free by racking up more and more debt. If you keep your credit cards in your wallet or purse you will find a way, or give yourself a reason to use the card to make purchases instead of using money that is actually yours by paying in cash or using a debit card. If you are serious about getting rid of your student credit card debt you will stop making purchases with the card immediately.

The next step in getting rid of student credit card debt is totaling up exactly what you owe and at what interest rate. You should be able to check your balance, or balances online and you should know what interest rate you are paying. This step is the “easiest” but it can be tough to face the facts and realize how much debt you are truly in.

Once you know what you owe you have to start paying it off. It is important to make a budget, to know what money you have coming in and where exactly the money is going. Dave Ramsey, a personal finance guru so to speak urges all his followers to pay themselves first, which means you should put money away to pay off bills and debts before you use the money to buy things that you do not need. I could not agree more with this sentiment! It is important to be very aggressive when paying off debts, especially credit card debt that can routinely hit 20% APR or more. The more money you set aside in your budget to pay off your student credit card debt the quicker you will be debt free and the less interest you will have to pay to the credit card companies.

It is important to pay off your credit card balances which charge the highest interest rate first if you have balances with multiple cards. This way you will end up paying less in interest, which means you will be relieved of your debts as quickly as possible.

In the end getting out of credit card debt or not having debt to begin with as a student comes down to discipline and how badly you want to live a debt free life. There is no worse way to start off your adulthood financially than to rack up thousands of dollars in credit card debt, especially if you have student loans or other debt to pay off as well. You need to sit down and think about what is truly important to you, financial independence should be on your list.