Financial Tips | Debt Management

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How to Avoid the Credit Card Trap for College Students

For most people, college is the first time in their life that they are living by themselves. This means that they have to pay bills, get a job, make adult decisions, and take on adult responsibility. It is also usually the time when a person gets his/her first credit card. As such, this can be a time of tremendous financial hardship and temptation.

Many college students abuse their credit card. College students see a credit card as an extra bank account. However, they quickly forget that every dollar they spend with the credit card has to be paid back in full, with interest. Additionally, because these are college students, the credit card usually carries an extremely high interest rate. This means that it is very easy to accumulate more debt that you can handle.

In order to avoid becoming a victim of credit card debt, you have to know from the beginning that credit is a tool that can either make or break your financial future. You do not want to leave college with a low credit score.
Doing so can prevent you from getting student loans (should you want to go to graduate school) and can also prevent you from making the "big" purchases in life (for example, a home or a car). Therefore, the solution is to prevent yourself from being put into this position.

In order to prevent being put in the position of having too much debt, you have to realize that debt takes time. You do not go to bed one night with no debt and wake up the next morning with $10,000 of credit card debt. Debt accumulation is a process of bad choices. If you realize this and you notice that you are being careless with your credit card, you can break the cycle before it spirals out of control.

Another way to prevent a large accumulation of credit card debt is too limit yourself to one credit card.
By having only one credit card, you cannot get yourself in too deep should you start to abuse the privilege of having credit. Additionally, make sure that the limit on your credit card is no more than $500.
This is another "safety net" that you can put in place in order to avoid overusing your card.

The best way to prevent credit card debt accumulation while in college is to use the credit card for emergencies only. An emergency is not a late night run to your local fast food restaurant. An emergency means your car broke down on the highway in the middle of nowhere, you have no cash, and the tow truck costs money.

Realize that credit is a privilege, keep track of your spending and break the cycle before your debt gets too big to contain, keep only one card and make sure the credit limit is not above $500, and use your card for emergencies only. Follow these tips and you can leave college with an A+ credit score.