When in college, a Tennessee student may be more worried about classes, grades and social life than their credit score. However, many college students apply for credit cards while in college, and if attention is not paid to how that card balance is being handled, a considerable debt issue could arise. While students should not necessarily avoid opening accounts altogether, avoiding mistakes can help with credit card debt.
The first mistake a student could make is not paying off their credit card bills every month. They may think that only paying the minimum balance after making a significant purchase will help them maintain some of their money. However, interest rates can add a considerable amount of money to those balances, and individuals who only make the minimum payments are typically hurt financially in the long run.
Attempting to pay tuition with a credit card could also be damaging for a student. Though it may seem like a way to avoid taking out student loans, college tuition costs can leave an individual with an extremely high balance. Again, interest payments on a credit card balance will likely make that amount considerably more. Though interest fees are also applied to student loans, the rates for credit cards can be much higher.
Many individuals may hope to avoid credit card debt altogether, but college students may find themselves in need of financial assistance. Opening a credit card account can be helpful at the time and for their future credit score, but if they are not responsible with spending and payments, they could find themselves in a difficult situation. If the debt becomes too overwhelming, looking for debt management options in Tennessee could be an adult decision they need to make.
Source: Fox Business, "6 Credit Card Mistakes Students Make", , May 22, 2014