College is a great way to learn, and a degree proves that the student has learned his class lessons. But there's one lesson that is learned the hard way, and without earning a degree: Student credit card debts.
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Many college students do not; or will not, have any steady income while attending college. While a credit card can help make ends meet, its convenience makes it all too easy to go overboard with debt that cannot be repaid quickly.
On the other hand, using a credit card can help establish credit.
Plastic is a two-edged sword... it can help, but it can hurt, too.
Nellie Mae, a college loan organization, published a national survey which revealed 76% of undergraduates started the school year with credit cards, and the average outstanding balance was $2,327. About 42% of freshmen had at least one credit card.
Last spring, a survey of 2,300 UWM students showed that 86% had at least one credit card, and 23% of them had a monthly balance between $1,000 and $5,000.
In addition to their college loans, credit cards with an average 18% interest is racking up student debt obligations.
In addition to lack of education (first time students living on their own), many students do not fully realize the true cost of using credit cards, and are not paying off the balance in full month-to-month.
Banks and card issuers offer their credit cards to students, because they are potentially long-term customers. And certainly students can benefit from the convenience of carrying plastic versus cash, and credit cards can offer a financial safety net between paydays. The ultimate burden of responsible use; however, rests solely on the shoulders of students.
With the high risk of students incurring credit card debt, you would think that card issuers would not aggressively advertise their cards to students. But since most students are anticipated to graduate and to obtain a job that will make it possible for them to repay credit card debts, and the possibility that students will retain the card long after, banks and credit card issuers see students as long-term customers.
Word of Wisdom: For college students who want the convenience of carrying plastic versus cash, consider a pre-paid debit card. Not only can it help you prevent high debt balances, but most also help establish credit.
Already in Debt? Consider credit counseling or debt settlement. Credit Counseling can help save your credit rating, but takes longer to repay the debts. Debt settlement; on the other hand, is faster and less costly, but can severely damage credit for up to seven years.
Apply for student loan consolidation, or submit an online application for a student credit card at Credit Federal.
