The Boon Or Bane Of College Credit Cards

Category: Finance, Credit.

College student credit cards have replaced student loans as a freshman s first experience with student credit. The question is- why do many students find themselves in a vicious cycle of debt with their college credit cards?

At the sophomore level, out of a sample of 100 students, over 90 are found to hold at least one college credit card. Why are they astonished with the huge bills they receive each month? There are plenty of statistical indicators to suggest that students run up credit bills regularly yet they do not pay down their card balances nearly enough. Most importantly- must it necessarily always be this way for a college credit card user or is there a simpler way? Approximately 21% of college credit card users have balances between$ 3, 000 and$ 7, 00The number of credit cards in an average student s possession keeps increasing- a sign that they might be acquiring new cards to pay off balances on old ones. Five Steps to Avoid the College Credit Card Debt Trap.

But this only leads inevitably to their overall credit balance increasing even faster, adding more debt to a seemingly never- ending downward spiral of debt. The core reason of this pathetic plight is the absence of a disciplined and planned system of spending. Late fees are the most unnecessary source of additional credit expense. If you, wish to optimize, as a student the use of your college student credit cards, use the following guidelines to plan your spending: - Pay your bills on time. Always ensure that at a minimum, you always meet the minimum payment on your bill. 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.

Ideally, you should try to pay more than the minimum amount to reduce overall charges. - Use the 20/ 10 rule. In other words, balance your credit budget to avoid irregularities in monthly payments. - Plan your credit expenditures. This can lead to ever increasing credit card balances. over a long period. With college credit cards at your disposal, it is easy to give in to the temptation of impulse purchases. It is ALWAYS better to plan purchases using your college credit card so you can ensure you only make purchases that you know you can easily pay off. - Avoid cash advances. There may be extenuating circumstances that will require you to incur unplanned expenses, but if you stay well within your credit limit by avoiding unnecessary charges, you can enjoy the satisfaction of knowing that you can comfortably use your card when you really need it. The finance charges for these are generally much higher than standard credit purchases and can be very expensie. - Avoid approaching your credit limit.

The Boon or Bane of College Credit Cards. These tips are especially useful for those who envision needing an extra job in order to pay your off credit card bills. If the guidelines outlined above are kept in mind, you will find that you can live comfortably with college student credit cards. Ideally, a balanced credit budget and a zero card balance is the best way to handle your credit card expenses. So, while college credit cards can be extremely helpful to certain individuals, they can also prove to be a huge detriment to those who do not budget and plan to use them accordingly.

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