Debt Savvy: College Students and Credit Cards

Debt Savvy: College Students and Credit Cards


That was just one finding in a Sallie Mae report that also noted that college students typically have multiple cards with more than half possessing at least four cards. No wonder that that some grads are struggling to make ends meet: student loans and credit card debt are big burdens to carry.

Student loan debt is typically paid off over many years, with loan consolidation one option grads take to handle payments. When it comes to credit card debt, there are certain steps that you can follow, debt savvy methods you can take today.

1. Know what you owe. You should know the exact amount of debt you have, right? Well, only if you take the time to read your credit card statements. Begin your quest to control your debt by totaling up your credit card statement totals first.

2. Understand interest rates. Your debt problems can certainly be exacerbated if your interest rates are high. Examine your statements to determine what the credit card company is charging you. For instance, you may only owe $3,000, but if your interest rate is 19.8 percent, then you are paying $594 in interest payments alone each year.

3. Snowball your debt. Pay down your debt bit by bit, by making payments that are larger than the minimum. You may also want to employ the debt-snowball method for help in reducing what you owe. Under this arrangement, you pay off your smallest balance first before tackling the next highest balance. As you pay off one loan, you will more money to direct toward your next highest balance. Keep at it until your debt is paid off.

4. Know how penalties can hurt you. It may be tempting to avoid your debt problems, but once you are late making a payment on your credit cards, you will be hit hard by penalties including fees and higher interest rates. Moreover, late payments can trigger notices to the three credit reporting bureaus, effectively damaging your credit and worsening your problems. Make a point to pay your credit cards on time. Once you fall behind, expect to be hit with penalty interest rates, of 20 perhaps 30 percent or higher.

Getting Help

If you are still struggling to make ends meet, get help. Millions of consumers annually seek assistance from credit counselors, individuals that can offer debt solutions and help you develop a personal plan to stay on financial track moving forward.

See AlsoUse Your Student Credit Card Responsibly


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Categories: Personal Advice