College Students Abusing Credit Cards

While in school did you ever sign up for a credit card just to get the free t-shirt or glass that came along with it? At my school the credit card sign up tables lined the main walk ways the beginning of each semester. I witnessed numerous students sign up just so they could get the freebie that came with the offer. Since many college students do not learn much about credit in school, a free t-shirt for 5 minutes of their time didn’t seem like a bad deal. This couldn’t be further from the truth.

Students who do not understand credit can be very dangerous. Dangerous to who you might ask? Themselves! It just seems so easy at first. Go shopping, hand them a piece of plastic, provide a quick signature and boom, I’m on my way. The end of the month comes and the bill shows up. To their surprise, they don’t have to pay the full amount of this shopping spree, rather they just have to pay the minimum monthly payment. Of course at the time, with their lack of credit knowledge they are unaware that the remainder of the balance is being charged interest upwards of 30% in some cases. What this means is that if you run up a balance of $2000 dollars, which isn’t unheard of for a student with new found credit, your pay off time table may look something like this. With an interest rate of 24.99% and a minimum payment percentage of 3% it would take you 252 payments or 21 years to pay off that debt! Throughout the life of the debt you will pay $4,024 in interest! So your $2000 purchase ends up costing you $6,024 and takes you 21 years to pay off.

Hopefully this is a wake up call for most people reading this. If you have yet to start abusing college credit cards, do not start. If there is something you want, create a budget and start saving until you have enough money saved to purchase that item with cash. If you are somebody who has already taken part in misusing credit cards, have no fear. In a future post I will show you the steps you can take to eliminate your debt. It will take discipline and time on your part, but if you follow the steps I provide you will be debt free much faster than if you continue your credit abusing ways.