Avoid credit card catastrophes – Smart ways a student can avoid incurring debt

Woman smiling and holding a credit card. Photo courtesy of Shutterstock.

Nowadays the students arrive in the colleges with shiny new credit cards and spiffy new backpacks, with a determination to enjoy their college life. They leave college with thousands of dollars piled on their high interest credit cards. Students are of the opinion that they should live on their own so that they can lead their own extravagant life and they also feel that once they leave college and grab a job, they can easily repay their debt amount. But are they really aware of the sluggish improvement of the job market? Did they ever anticipate what would have happened to them if they aren’t able to manage a job in this tough labor market? Well, if they had thought, they wouldn’t have taken all the wrong financial moves at the same time. As the students know that there are credit card consolidation firms that can assist them in getting out of debt, they adopt a lackadaisical attitude towards their personal finances.

The Generation-Y or specifically, the students are the most vulnerable people to the credit card companies as they’re sure about pulling them into their business by luring them with various gifts and rewards. Students tend to take on more and more credit cards with the thought of getting better gifts but this is not something that should be done during this economic condition. If you too are going through such an economic phase, you should be aware of the steps through which you can avert the risk of accruing credit card debt. Read on the concerns of this article to know the ways to adopt.

• Say ‘No’ to marketing tactics: You shouldn’t care even if all your friends are taking on credit cards and are receiving awesome gifts. They usually give out incentives like clothing, free lunch with someone famous in order to make more and more students sign up with the company. But as per the Credit CARD Act of 2009, all such marketing tactics are strictly prohibited.

• Know the credit card laws that bind children: Being a student who is also a credit card user, you should be responsible enough to know the laws that bind the children. The CARD Act of 2009 requires anyone below 21 years of age to have a co-signor while signing the final deal with a credit card company. This particular rule is there so that not everyone can get a credit card and start misusing it.

• Say ‘No’ to multiple credit cards: Even though your friends are using 4-5 credit cards at the same time, you should take steps to avoid succumbing to this temptation as this is the biggest blunder that will put you deeper into credit card debt. If you feel the urge to carry a credit card for emergencies, you should stick to using a single credit card at a time. Just ignore all the mails that you get in your inbox from the credit card companies.

• Pay off the balance in full: Don’t carry over the balance that you incur in a month to the next month as this will be a trap to push you further in credit card debt. Save enough money so that you can pay off the balance in full and avoid accruing unnecessary late fees and penalties.

• Pay more than the scheduled minimums: If you’re a student who’s just paying the minimum amount that is scheduled every month, you’re again handling your cards in the wrong way. The lesser you pay, the longer you’ll be in debt and the effect on your credit score will be more severe. Therefore, make some extra payments above the scheduled minimums that you’re supposed to pay.

• Get professional help: Not getting professional help with the fear of being rejected is another mistake that is committed by the students. Whenever you feel that the credit card debt is spiraling out of control, you should immediately get professional help. There are non-profit credit counseling agencies and the credit card consolidation programs through which you can easily repay your debts without further hurting your credit score.

So, if you don’t want to spend sleepless nights worrying about your escalating credit card debt level, follow the steps mentioned above. Lead a financially disciplined life so that you may get new lines of credit at an affordable rate in the near future.

By Andrew Jackson, financial counselor associated with Oak View Law Group, APC now for over 4 years. He analyses people’s financial situations minutely and advises on different debt relief options available. He also helps people manage their budgets through free counseling.