Credit Card Debt Management

Did you know that the average college student has more than $3k in credit card debt? This is hard to believe. You would think by now that most college students realize that carrying a credit card is a big responsibility. There are benefits of using a credit card as a college student, but only if you are prepared to be 100 percent responsible. Otherwise, if you are in college and need money you should think about your other options.

Your credit history is very important. This is why starting as soon as possible is not a bad idea. But again, college students are different. If you are going to apply for a credit card while you are in college you need to answer a couple of questions before moving forward.

1. What am I going to use the credit card for? If you don’t have an answer to this question there is really no reason to apply for a credit card. Make sure you are not getting a credit card just so you can buy things you don’t need.

2. How will I pay the bill when it comes? Remember, using a credit card is not like cash. You have to pay the bill when it arrives once per month. Do you have a job that brings in money for paying this sort of bill? Will your parents pay it for you? Make sure you know where you are going to get the money to pay your credit card balance.

As a college student you can benefit from a credit card in many ways. As you build your credit history and show that you are responsible, your credit score will continue to increase. When you finally graduate from college and make your way into the real world, a high credit score will go a long way in helping you reach many personal and financial goals. 

Are you facing debt on more than one credit card? If so, you have to make a decision on how to best pay off these balances. There are a couple of different methods you can use to accomplish your goal. Every consumer is different so make sure you choose the method that is right for you.

1. Attack the credit card with the highest interest rate. This is often times the best method because it ensures that you will pay the least amount of money possible in terms of finance charges. Over the long haul, paying off the highest interest rate card first can save you a lot of money.

2. Pay off the credit card with the lowest balance. Many people opt for this strategy because it allows them to get a card off their plate, while also increasing their level of confidence. When you pay off a credit card you can forget about it forever. Those with low balances are easiest to pay off. In turn, you are sure to be motivated as you move forward and attempt to pay off all your debt.

Which one of these strategies is best for you? You may have a different method in mind, but these two are definitely the most common. No matter what you decide on, make sure progress is your number one goal. If you can see your credit card debt getting smaller as the months go by, you are moving in the right direction. Both of these methods should allow you to pay off your debt quickly and efficiently. 

It is your right to use your credit card however you see fit. There is nobody who will be able to tell you what to do. Not even your credit card company has a say of what you buy and how much you spend; as long as you don’t go over your limit. Of course, this does not mean that you should be reckless with the decisions that you make. The way that you use your credit card is very important.

You probably fit into one of the three categories below. They are based on how often and what types of purchases you make with your credit card:

1. Small purchases. Using your credit card for small purchases, such as gas and groceries, is something that many people do. The problem with this is that small purchases can add up quickly if you are not careful. Make sure you keep track of what you are buying.

2. Big purchases. Do you only use your credit card to make large purchases such as car repairs, big ticket electronics, etc? If you are this type you probably buy everything else with cash.

3. Only for emergencies. Many are well aware of the dangers of credit cards so they only use their plastic for absolute emergencies. For this reason, their credit card may sit dormant for months or maybe even years on end.

Again, you do not have to listen to anybody else. You can use your credit card however you want. That being said, you definitely fit into one of the groups above. Or at the very least, you are a mix of more than one category. Knowing how you use your credit card can make it easier to stay financially safe.