The college credit card debt is skyrocketing. It does not help that the tuition and other costs are rising so some have credit card debt as high as $7000. They use plastic to buy textbooks and other school expenses. No wonder the amount charged has gone up from $942.00 four years ago to $2200.00, on the average
Parents have to prepare their children to avoid the college credit card debt. This is the best thing they can do. Talking about it before college will be of help but this has to be done regularly. Plan a time to do this on a weekly basis as the talk will involve not only calculation of fees and interest rates. Here are the tips for parents:
- It will be useful to co-sign a credit card with the child as soon as he is mature enough to understand about finances.
- Show the student how to get a credit card with no annual fee and a low limit.
- Talk to the student about the terms of the credit card like the interest rate on what you buy and on advances as well.
- Help the student keep a record of purchases so that he will not go over the limit for doing this may increase his interest rate on everything else he buys. Tell him also to avoid making cash advance as this incurs interest rate the moment you get it.
- Every month when the statement arrives, check each purchase against your list. Point out the due date, the minimum payment due, and the full balance. Explain to him that if it is not paid in full, it will carry an interest rate which sometimes is double digit. The same is true if it is not paid on time.
- Show what a good role model you are by exercising restraint in what you buy and in avoiding penalties.
Tell the student to make sure he understands the messages he receives in advertisements. He will have to comprehend the difference between what he needs and what he wants. This will prepare him to make wise decisions and will be better prepared to resist the lure of money.
Now how about the students? What do they have to do to avoid the financial mess of a high college credit card debt? Resist the temptation to sign up for credit cards just because they will give a t-shirt for it. It is better now that colleges and universities are restricting the marketing of credit cards on campus. Here are the tips for students:
- Get only two credit cards for each one will carry some work for you. You have to record the fees, balances, interest rates, list of purchases and due dates.
- The magic of compound interest will work against you when it comes to credit card debt.
- Be careful what you buy. If you can’t pay for it in full at due date, even what you buy on sales could double the price down the road.
- To get out of college credit card debt, stop using the plastic money, pay on time and pay more than the minimum. Pay off the card that incurs the highest interest rate and minimum only on the others. Then go to the card with the next highest rate.
- Forgetting to pay on time will impact your credit score which will take years to correct.
- If you need help, talk to someone trustworthy. Avoiding the statements will only make matter worst.
- Use the card wisely. Be responsible with your finances and you will be fine.
