Presently, the students already have enough to worry while sending their kids to college. Will they attend the classes regularly? Will they party too much? Will they rack up an overwhelming amount on their multiple credit cards? While the first two questions are important ones, the last one holds utmost importance in the life of a student and a parent. Student loan debt had surpassed the consumercredit card debt consolidation recently and as per the Consumer Reports, the 2011 graduating college students will have the highest amount of debt till date. With the constant rise of the tuition rates, an increasingly large number of college students are turning to their credit cards in order to make ends meet. Can you imagine going to college and walking away with $50,000 debt on your credit cards? This is going to wreck your future in many ways. Read on to know how.
Credit card debt can cost you dearly in the long run – What are the ways?
Debt problems among students can lead to depression and apart from affecting your academic performance; it may also hurt you mentally and financially. Have a look at the ways in which credit card debt can cost you as a student in the long run.
- It can trash your credit score: As a student, you must be over concerned about your credit score as this will create the base as a borrower. If you incur too many high interest debts in your student life, you’ll trash your credit score without even starting to build it. This may cost you dearly in the long run.
- You’ll become an impulsive shopper: Practicing the bad habit of over-using your credit cards will ultimately make you an impulsive shopper when you grow up. With the present market conditions, we can well understand that situations will get worse with time. During such a time, if you can’t contain your financial habits, you may fall in trouble in the future.
- You’ll bar yourself from grabbing the best job: As you develop the bad financial habits like misusing your credit cards, you will gradually hurt your credit score. Without an exceptionally good credit score, it is impossible for you get a good job as the employers will check your score before giving you a job. You will also restrain the chances of getting new lines of credit at a low interest rate.
How will the young spenders avoid the pitfalls of accumulating credit card debt?
If you’re a young spender who has already accumulated credit card debt, you have to make sure that you take some solid steps to avoid the immediate pitfalls. Debts, when left unattended can have a bad impact on your life. Have a look at some steps to take.
- Start building an emergency fund: The first step that you must take is to save some money from your part-time income or from your allowances so that you can start building an emergency fund. Use the proceeds when it's time to repay your revolving credit card debt.
- Stop using your plastics: Whipping your plastics while making every little purchase has become a trend among the young generation. Shun this habit if you want to lead a debt free life. Stop using your plastics totally and use cash instead of credit. Don’t buy something with credit when you cannot afford it with cash.
- Get professional help: When you feel that your high interest debt is spiraling out of control, you must immediately get financial help. Get in touch with a professional debt consolidation company so that you can reduce your burden and repay the debts in single and affordable monthly payments.
Experts always recommend that parents must prepare their children about how to use credit cards way before they join college. Students with more than one credit card must know the importance of paying the bills on time and making more than the minimum monthly payments on their cards.