College students’ credit card debt is a rather big problem today, and there are statistics to prove it. There are good reasons to get a credit card while in college (for example, to build a good credit history), but treating cards like “free money” is very appealing, but not.
Find out more about university student debt for credit cards and learn important tips for dealing effectively.
If a credit company tries to seduce you with perks like high credit limits, low interest rates and credit card rewards, that may not be what happens in the end. Rather than having a wealth of extra cash, reality may seem like slow payments, annual fees, and bad credit scores.
Average college student credit card debt
Statistics regarding college students and credit card usage are not good.
Things have improved as credit card companies are no longer able to offer free products to students to encourage card applications, but there are ways to do this, such as by offering coupons. So unfortunately, credit cards are very accessible for university students.
Number of university students with credit card debt
A US News survey found that over 46% of university students who participated in the survey had credit card debt. Credit cards also come with very high interest rates.
Usually, how many credit cards are students who are in debt with credit card?
According to the same US news survey, most college students are in debt under $1,000. But there are some more.
In fact, 27% admitted that their debt was above $2,000.
This can lead to university students falling into a bad financial situation before they are held at school!
Credit Card Debt Tips for College Students
Whether you shop, pay for expensive car repairs, or need a new textbook, you may still be in credit card debt. You manage your credit card debt, plan to pay it back, and you won’t end up in the same trap in the future.
Here are some tips to help you get out of debt and improve your finances.
1. Please forgive your mistake
We’ve all made a mistake, and perhaps it’s one of you to implement the credit bill. Or maybe you failed your plan and had to resort to credits for some important circumstances in your life.
that’s ok. You’ve come to make it happen. Now, it’s time to make some changes and figure out how to manage your credit card debt.
2. Create a plan to repay your credit card debt as quickly as possible
No matter how small your income is, you need to plan where your money goes each month. Your plan should include the amount you will pay for your debt.
Depending on your situation, there are a variety of strategies that may work.
For example, the debt snowball worksheet method is a great approach to paying back multiple credit card balances. But if you only have one card, like I did, focus on paying back every month as much as you can until you catch up.
As a college student with limited revenue, this may seem overwhelming or impossible. But that’s not true. You can achieve your goal of living a debt free.
3. Save a little
Many people use credit cards to cover unexpected expenses such as repairs and medical costs.
Instead of relying on credit to cover these costs, start saving money with emergency funds. This will help prevent you from accumulating debt after all the major events that occur in your life.
Your ultimate goal is not to go beyond balance. You also want to have a fully funded emergency fund for 3-6 months of living expenses.
But for now, focus on reaching around $1,000 in savings. Or even $500 if it covers a huge cost for you. If necessary, split it into smaller goals.
Getting a part-time job or trying out passive income ideas for students can help you save this money.
4. Earn more money to pay off your debts
If you can increase your income, you can exceed your minimum monthly payment on your card. Think about various ways you can earn extra cash, such as walking your dog or extra time at regular work.
If possible, apply all the extras towards your debt. Of course, after paying the fee.
5. Live under your means
A key step in how to manage credit card debt is to live under your means. Living under your means will prevent you from acquiring credit card debts for the average college student.
The average credit card debt for college students is less than about $1,000. However, the average credit card debt for American households is above $17,000. Bad habits are difficult to break, so if you can get your finances now, it will prevent future financial disasters.
6. Don’t avoid spending
Another important step is to learn how to stop spending money. It’s too easy to reach out to that credit card for an impulse purchase, so you’ll end up paying far more than you thought it would cost the new item you purchased.
Let’s say you spend $20 a week on coffee. That amounts to $1,040 in a year! You can pay back your credit card with that money.
By not eating out frequently, you can save money and avoid debt by learning the basics of grocery shopping on a budget and buying existing items rather than new ones.
7. Do not take on any further debts
In addition to making a minimum payment and paying off your debt, if possible, don’t add it to it. To reduce your credit card debt, we will stop using your credit card.
If you are using your card today, remember that it is money you have to pay back later. Every time you don’t use them, you’re helping yourself get out of debt faster.
8. Build a good credit score
Perhaps you are well disciplined in your spending because you have a credit card. In that case, if you want to start a credit building, you will pay the full amount each time.
Paying your credit invoice in full and keeping your card in good condition will help you in your future finances.
However, make sure you use it for your regular expenses you pay back each month, not unnecessary expenses. And do this only if you know you won’t get into debt.
Expert Tips
Even if you feel like your credit card debt is huge and there’s a lot to do, start off. Time passes faster than you think, and as soon as you can pay off a little debt, you start to feel better. You will also go through this process to learn good financial habits.
My College Student Credit Card Story
Like many people, I have made quite a number of bad financial decisions. And one of them was taking credit card debt as a young university student. I actually surpassed the average credit card debt for college students.
When I was in college, all major events and job fairs always seemed to have agents (for financial destruction) from credit companies. If you sign up for a credit card, a booth decorated with balloons will be decorated and you will receive a free T-shirt and pen.
I remember being seduced by one such booth. All I had to do was fill out this one form. You don’t need to pay back your money right away.
Plus, I got this amazing T-shirt from a credit card company branding. (But where do you wear it?)
I was 18 or 19 at the time, but I was working part-time on campus away from home and paid $116 every two weeks. That was the only job I was allowed to have as an international student.
Luckily, my mother supported me by paying my tuition and rent. Still, my responsibility was paying my phone bill, buying my own groceries on the cheapest grocery list, and caring for other personal needs.
So I paid a monthly phone charge (~$30) and bought enough Coca-Cola and ramen noodles (~$40) to survive every two weeks. (I don’t know how I survived this horrible meal.)
How did you get your first credit card
I found myself calling home and talking about the “basically free” money that I had been offering at school. Her response? “What do you need in life to buy with credit?” She had a point.
Well, at the next fair, there was another booth and another agent. Again, I was seduced by the giveaway and perhaps free money.
My mother explained to them that she didn’t think it was a good idea. They said, ‘But your mother never needs to know. Send your statement directly to your campus address. ‘
And so, I signed up right away and was approved with a $2,000 credit line.
Blows out the entire balance of your credit card
I can’t tell you what I spent that $2,000 for my life. But I can say I maximized that card very quickly.
When I received my first statement a few weeks later, I was confused. What is 24.99% of the interest?
I had a sleepless night about my newly acquired debts and the fact that I didn’t know how to get out of my credit card debt. It seems he couldn’t understand how to stop worrying about money.
In the end, I had to tell my mother what I had done (before she knew). Of course, I received the right old.
Then I used a small savings (and meant a small amount, or $75) to pay off the money and debts I was making from my student work, earning the horrible interest it accumulated.
The impact of debt
Thinking about it every day, like $2,000 now, has caused a lot of stress for me and it took me months to pay it back, but I certainly have learned a valuable lesson on how to manage credit card debt.
After all, I ended up paying back $2,000 and 24.99% compound interest.
Moral of this story: College students’ credit card debt is terrible if they don’t have the means to pay off the whole month.
University credit card alternatives
There are many other ways to pay for your expenses and extras while you’re in college. Try these ideas instead of relying on a credit card.
Part-time work
If you want to avoid debt, you can get a part-time job while you’re at school or try out the fuss of a unique aspect. Work will help you cover your living expenses and extras without dealing with credit card bills.
Plus, working now is a great practice for when you are likely to do full-time work after graduation.
Debit Card
Rather than worrying about credit card payments or late fees, you cannot simply open a credit card account. Yes, that might mean finding other ways to pay for essentials, such as waiting for some purchases or spending more time, but on the bright side, you don’t have any debts.
Better spending habits
Instead of falling victim to a credit card, be aware of your spending habits and avoid impulsive spending. Even if you can’t spend too much, make a budget every month.
Know how much your bills cost, how to pay them, and don’t spend money you don’t have.
What if you have a lot of debt?
The best way to approach a large amount of debt is to know all the facts first. How much do you borrow and when are each payment due?
From there, take your time to consider how you will pay it back.
How to handle student loans and credit card debt?
If you have both a loan and a credit card debt, the good thing to do is focus when you need to pay them. If you are still in college and don’t have a student loan planned, focus on your credit card debt while you’re still at school. You can then get more advice on student loans and work on them when you graduate.
Can I graduate from university without credit card debt?
That may seem impossible, but yes, you can go through the university without becoming part of the average college student’s credit card debt situation. Simply open a credit card, refuse to pay things with cash, and refuse to take a side fuss to buy things rather than in debt.
Other articles related to university student debt
Avoiding credit card debt at university can save you money and stress
Ignorance is not bliss when it comes to your personal finances. They will eventually come back to bite you. Educate yourself about all your current debt, learn how to know interest rates and manage credit card debt.
Keep your peace of mind knowing that as long as you are consistent, you have a plan to pay off your college student credit card debt.
Once I’ve lost my debt, I look forward to creating healthy financial plans for my life and building good money habits.