Credit Card Usage & Debt Among College Students

The issue
Credit card companies have long targeted college, and even some students. New federal legislation that went into effect in 2010 restricts credit card issuers from issuing cards to students under age 21 with no adult co-signer or proof of income. But with regard to older students, financially independent students and those in whose parents trust them enough to co-sign, credit cards continue to be a common source of overspending. College students faced with a lot of necessary and discretionary spending opportunities often apply for a number of credit cards and quickly build up high amounts. The freedom of using plastic and the delay in paying the bill makes it simple to overspend, especially for full-time students who possess a limited income or no income at all.

Options
College students can avoid the problems that originate from credit card usage by finding other ways to cover their educational and personal expenses. Students with a part-time job can use their bank account and debit card to make only those purchases that they'll afford given the account balance. Students who rely on their parents for living expenses won't have the ability to overspend if the parents deliver the money in installments instead of large lump-sum payments. Finally, students can use education loan funds, which are limited by the lender, to cover some or all of their necessities including publications, course fees and room and board.

Sources
The ease with which college students can rack up college credit card debt is compounded by the fact that low introductory rates of interest often rise over time, increasing a student's interest payment every month and making it harder to pay down the balance. Students who miss payments incur late fees that increase how much they owe. Many colleges and colleges offer financial counseling services for students, but those who don't make the most of these services fail to learn about responsible investing. Parents and administrators who prefer to let students make their very own choices, including financial decisions, may not know the extent of the student's credit card overuse until it's too late to locate an easy solution.

Tips
College students and their parents can take a few practical steps to reduce the problems that come with credit card use. Students who draft personal budgets are more in a position to understand what the expenses of college life are and how to cover them. Student credit cards, which may require a parent or guardian to serve like a co-signer, have low credit limits but still give students the convenience of using credit and an opportunity to start building a good credit history.

For students already in college credit card debt, transferring the balance to a credit card with a lower interest rate is one method to lower the cost of interest. Credit counseling providers are another option. They can help a student reorganize credit debt upon graduation, making it easier to pay from the debt with the income from a new work.