Tips for Avoiding Student Credit Card Debt

Avoiding student credit card debt should be a high priority for anyone in or on their way to spending time at a college or university. When your priority is getting an education to prepare of a job in the future it can be very easy to rely on easy credit for spending, but don't do it.

In this tight job market all graduating students should keep this in mind. Qualifications that might have had you walking straight into a top job a few years ago simply won’t cut it today.

You can bet any prospective employer will be having a look at your credit report and evaluating any outstanding loan balances. Starting your working life with big credit card bills can be a major disadvantage as you seek employment.

Use these three tips to help you make wise financial decisions and form good habits for credit card use during these important years.

Limit Spending

It may seem obvious, but many students actually use their credit cards to purchase unnecessary items which they could do without while also avoiding student credit card debt. Treating a credit card like free money is an excellent way to graduate with massive debt problems.

You need to learn to respect the card and only use it when you absolutely need to, and when it makes financial sense to do so. For instance, if you’re using a credit card to buy textbooks at a discount online, that is a sensible move. Using a credit card to buy several new pairs of expensive shoes is not so sensible, you are much better off saving for a purchase like that and paying cash.

The same rules apply if you are spending money on your credit card while out partying. You may not want to miss out on the fun while at college, but if you cannot cover the costs of your lifestyle with cash earned from a part-time job or some other reliable income source you are asking for trouble. Resorting to credit card use will likely to dig you a financial hole you will find it difficult to climb out of after graduation.

Find the Best Credit Card for Situation

Not all credit card agreements are created equal. Ideally, you want to seek out and secure a credit card designed specifically for students. Be very wary of the fine print though, some credit card companies are not above luring students into debt by offering low or zero-percent interest rates for a short period of time, only to jack up the rates later. These teaser interest rates are not for students who have limited ability to payoff an outstanding credit card balance.

Here is our list of important considerations for students when researching and choosing a credit card.

• Determine the introductory interest rate.
• Determine the long term interest rate to be applied after the teaser rate expires.
• Investigate any other fees that may apply to the card or outstanding balance.
• If the card is marketed to be student-specific, find out what extra benefits make it worthwhile.

Pay on Time

The best tip we can give you for avoiding student credit card debt is to make sure you pay your balance in full and on time every month. If you do this you will never be hit with and late payment fees or exorbitant interest rate hikes. This is one of top reasons many students have outstanding credit card debt that is spiralling out of control.

The minimum payment amount set by the credit card company is designed to keep you paying the balance for a long, long time. Always pay off your balance every month. If you only make the minimum payment you will be adding significant interest expenses to your balance. By paying more than the minimum, you chip away at the balance and reduce the overall interest you have to pay in the coming months.