Avoid Credit Card Debt
Credit card companies market their products and services very heavily on college
campuses, as it’s a good place to find new customers who are low on cash and looking
for a good deal. Although getting a credit card and using it wisely may be a good
idea for college students who want to build a good credit history, it can also land
you in trouble if you don’t practice good money management.
There is a big difference between getting a credit card and applying for every credit
card offer that is made available to you. You probably already have some student
loans, so don’t be tempted by every free T-shirt offer you see, because you could
find yourself in a heap of even more debt if you max out every credit card you’ve
applied for. One of the most basic principles of good money management is to avoid
spending more that you can afford. When you have several credit cards, it becomes
too easy to get into a large amount of debt that you will have a hard time paying
off, even if your maximum balances on each card aren’t very high. (Consider this.
The average credit card debt of the typical undergraduate has hovered around $3,000
for the last few years.)
We’ve come up with a list of credit card money management tips that should help
you control your spending. Obviously the easiest way to avoid credit card debt is
not to apply for a card in the first place, but we understand a card can be useful
for emergency expenses and building a credit history that you’ll need for major
purchases down the line. Follow these tips and you’ll be a much more responsible
credit card holder with a balance you can cover each month.
Credit Card Money Management Tips
- Stick with one major credit card, and don’t use it for unnecessary purchases.
- If you have more than one credit card for whatever reason, don’t carry more than
one when you’re out shopping.
- If the credit limit on your credit card is higher than it should be or that you
need it to be, contact the card issuer and request that it be lowered.
- Do not charge more on your credit card than you can pay in full each month. If you
find yourself unable to pay off your credit card bill one month, do not use the
card again until it returns to a zero balance.
- Do not use your cards to cover your tuition. There are other options out there,
even if you need to contact private student loan agencies, that won’t charge you
the outrageous interest rates credit card companies will.
- Do your homework. Don’t be naïve when it comes to applying for a credit card. Many
interest rates are negotiable, and some companies will even offer a year without
interest for students.
- Avoid cards with annual fees.
- Keep records. If you know exactly how much interest you could potentially pay on
that impulse buy, chances are you may not make it in the first place. Always know
your current rates, and your balance.
- Don’t use a card to get cash advances if you can avoid it. Many companies charge
an additional fee when you use your card for a cash advance.
- Always pay on time, even if you can’t cover your balance. Late fees will only add
to your debt, and hurt your credit score in the process.