Avoiding Credit Card Debt in College

Today, college students are accumulating larger credit card balances and graduating with increased debt. While cost of tuition and fees are increasing at schools, students are pulling out the plastic to cover more purchases. Unfortunately, many of the purchases made with credit cards are for living beyond their means. Students are building large credit card debts for consumer goods and developing poor money management skills for the future.

Credit Cards in College

Throughout the past decade, credit card companies have targeted college students. According to the article, “Why Do Credit Card Companies Target College Students?” written by Liz Roberts, credit card companies have used many giveaways, including “CDs, mugs, and T-shirts.” Credit card companies try to gain loyalty with consumers while in school but also look for considerable profits from students making late payments or only paying the monthly minimum.

According to SallieMae.com, the average student today is putting “$2,200 on credit cards for educational expenses.” This includes tuition, books, and general fees associated with higher education. This statistic is “more than double the $942 spent in the last year.”

Sallie Mae also found that many students are using their credit cards for expenses associated with “living beyond their means.” This is contributing to the average undergraduate student accruing “$4,100 in credit card debt, up from $2,900.” Students are buying flat screen televisions, clothes, and expensive phones with money they do not have. Carrying a balance for years results in students paying considerably more and developing bad habits.

Developing Bad Money Habits

Poor money management skills in college can translate to fiscal problems for years to come. Many college students will graduate with tens of thousands in debt, leading some to believe that adding only a few more thousand on credit cards is “not a big deal.” The problem associated with credit card debt, aside from interest rates often considerably more than student loans, is the habit of spending money that does not exist.

While in school, students are forced to take out loans to finance their education. These loans are considered an “investment” in their future. Accruing credit card debt, as a result of living “beyond one’s means,” was established when the college student had no money. After securing a job and receiving an actual paycheck, this habitual spending can increase. If a student was previously purchasing unaffordable items outside their budget with no money, having a little money in their pocket will only perpetuate bad fiscal habits.

Establishing Good Fiscal Responsibility

Students must establish strong fiscal responsibility while in college to develop good money management habits for the future. Using credit cards wisely builds a history of good credit that will benefit large loans, such as homes and automobile purchases. Unfortunately, many students abuse this “plastic cash” believing that charging up giant bills for electronics and clothes is “necessary” when in actually is “excessivity.”

Fiscal responsibility is very important, just as brushing teeth to prevent cavities or looking both ways before crossing the street. Without proper guidance, ignoring this critical “life skill” will lead many college students to insurmountable debt . Students, parents, and universities must promote good money management habits to ensure that the college experience prepares young minds for the future, instead of bankrupting it.