College years are one of the most memorable periods of your life. It is, undoubtedly, the exciting time when you learn, grow and enjoy with your friends to the utmost. However, due to academic stress, social life and money, it can create some kind of disturbance in the minds of the young graduates. So, in order to overcome money worries, the graduates depend on their credit cards without even understanding properly the danger of using it lavishly. Thus, they may end up accumulating excessive credit card debt and the high interest rate charged on it.
The college students are the susceptible victims to credit card debt problems. It is not at all surprising that you start receiving emails from the different credit card companies to buy a credit card as soon as you turn 18 years old. As such, it is vitally important that you gain proper knowledge about using the plastic money prudently. Without having proper knowledge, you may sign up for a credit card that offers low introductory APR, free t-shirts and thus, fall into huge credit card debt trap.
You must be aware about having poor credit score. With bad credit, you will not be able to apply for any new credit card. Also, no lender will agree to approve any kind of loan. This is because the credit card companies and the lender believe that you may default in making the payments since you haven’t been able to manage finances properly in the past. This may put you into unnecessary troubles in the future. So, it becomes very important to know how a student should deal with his/her credit card while being in college.
3 Steps to manage credit card wisely when you are a graduate
It is of extreme importance to swipe your credit cards only when you need to serve the purpose of emergency. The college students should understand when they should use their plastic money. Read on to know about the 3 steps to manage credit card wisely when you are a graduate.
1. Set up some rules and regulations – In order to deal with credit card properly, you should set up some rules and regulations and know for what purpose you may use it. Ask yourself the important questions such as will you use your credit cards only during emergencies or will you swipe it for food, gas, shopping and entertainment. It is very easy to pile up excessive credit card debt particularly when you do not follow any rule to use your credit card.
2. Draft a well-planned budget and stick to it – Make it a point to draft a well-planned budget and stick to it despite being what ever debt situation you may fall into. With the help of a proper budget, you will spend money within your means and avoid accumulating revolving debt. This will also enable you to learn the good habit of handling personal finances efficiently in the future.
3. Understand the clauses of the plastic money – You need to understand the clauses of the plastic money that you have. Even though you may have chosen your credit card from a particular company, you should always see how much it is actually costing you when you decide to buy one. For example, if you had received a 0% APR introductory offer, you should find out the exact date when the APR will increase and by how much it will increase.
Being a college student, if you have amassed credit card debt, you should begin to pay it off immediately. You can start with making more than the minimum payment every month. It will surprise you when you’ll realize how an extra $25 or $35 payment every month may help reduce your debt burden.
You can also transfer your revolving credit card from a high interest rate credit card to a low credit card or 0% APR credit card. Make it a point to find out if there are any hidden fees for transferring balance from one card to the other.
It is important that the college students should maintain credit history till they are using the credit cards responsibly. This can be done by paying down the credit card balance on time and eliminating debt problems. College students should learn to manage their credit cards in a better way when the proper guidelines are set, a proper budget is followed and they understand the terms of their credit card agreement properly.
About the Author
Andrew Jackson is a financial counselor associated with Oak View Law Group, APC now for over 4 years. He analyses people’s financial situations minutely and advises on different debt relief options available. He also helps people manage their budgets through free counseling.