Student Credit Card Debt

When it's time for students to leave home and begin their college careers, many parents either provide them with a credit card or encourage them to obtain a credit card on their own. This is possible because there are hundreds of credit card vendors who are looking to future college graduates as long-term customers. Having a credit card can mean the difference between buying books, supplies, and the items they need for dorm rooms and apartments or waiting until financial aid kicks in.

That first credit card is an excellent way for a young adult to learn credit management. Unfortunately, many parents do not explain the ramifications of credit debt appropriately, and few high schools offer training in this area. Some credit card companies offer high-limit cards to students with no income, and this can lead to frivolous spending, huge monthly payments, and extended repayment.

Watch Out for the Pitfalls

Student credit card management can be handled well when students really understand the consequences of credit card abuse. The basics are simple and take very little time to explain. First of all, the student should select the most inexpensive card possible. Parents can help students look for cards that come with no annual fees and low interest rates as well as spending limits that are not exorbitant.

One of the best ways to avoid excessive credit card debt is to counsel the student be determined to think carefully about every purchase and to avoid buying point-of-purchase items as much as possible. Another very good way to keep balances low is to pay off the entire amount spent each month or to pay significantly more than the minimum due. This allows the card holder to make needed purchases while reducing the amount of credit available as little as possible.