What Is Student Credit Card Debt

By Neil Farman on August 19th, 2007

Most undergraduate students, these days, have become unfortunately familiar with student credit card debt. A larger and larger number of students are graduating college with two things, their diploma or degree, and a sizeable amount of credit card debt. Recent studies show that the typical student in today’s world graduates with an average debt of over 18,000 dollars, 66 % more than the average student even five years ago.

A large part of this debt is due to student loans and unavoidable to an extent. However, a growing part of the debt stems from an unrestrained and irresponsible use of credit cards. College students are the new prime target segment for credit card companies. These companies have taken to marketing their services on over 1,000 college campuses, every day, says the National Consumer Council.

Their strategies of enticement include flashy, youth attracting moves such as free T-shirts, mugs and many other incentives handed over to the student, for simply filling out an application form. Students see credit cards as an easy way to get spending money, without having to ask the parents, or take responsibility.

Many apply for the credit cards with gusto, and use it indiscriminately. Between the beginning of their college course, and their graduation, most students manage to double their credit card debt and increase the number of actual credit cards in their wallets, threefold. By the time most of these college students get to their senior year, a large number of them are already carrying a balance between three and seven thousand dollars.

Unfortunately, many college students believe that credit cards give you free money. In reality, it is simply just another way to pay, but you do pay. A credit card is like being given a flexible, but short-term loan. When you use your credit card to buy, you are borrowing the money, to pay for the item, from the credit card company and will have to repay it when you are billed later. Students may confuse credit and debit cards.

Debit cards look and feel the same except that they operate in totally different ways. When you use a debit card, to pay for an item you buy, the money is being transferred directly from your own bank account to the store.

The point is that credit cards can be a wonderfully convenient, useful financial tool when used responsibly. They can be used to access goods and services anywhere anytime, they cut down the amount of cash you have to carry, making it safer for you. Using credit cards is a great way to begin your credit history, which is a very important factor taken in to consideration by lenders before approving a loan. However, to create a good credit history, you must use your credit in a responsible way.

There are a number of costs involved with using credit cards as well, from the annual percentage rate to transaction and other fees, most card issuers charge a big chunk of money. Credit cards are often an expensive way to pay, and students may not realize the seriousness of using them responsibly. It is of paramount importance for students to understand that the use of credit only increases your debt and credit card abuse over the long term lands you in unmanageable debt.

The trick to making the best use of student credit cards is to avoid impulse shopping, use your credit card for a emergencies, carry a few cards, just the ones you sill really use, and pay promptly.

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