Keeping Debt In Check For Students Fort Smith AR

Picture yourself in the not-too-distant future. After years of toiling away in libraries and lectures you are finally graduating from college. As you walk across that stage in front of friends and family, you're leaving college with worldly knowledge, a prestigious degree and...an enormous amount of credit card debt?

Unfortunately, this is the case for many graduating students in the United States. In this article, we will provide tips on avoiding the financial traps that students can fall into while tending to their higher education.

You may have seen recent reports and news stories about enormous student credit card debt. Or worse, you may be experiencing it firsthand! You are not alone. The average credit card debt owed by college students is about $2,700, with close to a quarter of students owing more than $3,000. About 10 percent owed more than $7,000!

According to Nellie Mae, a leading provider of higher education loans, a study of last year's student loan applicants showed:

• Students held an average of three separate credit cards
  
• 78 percent of students had at least one credit card
  
• 32 percent of students had four or more credit cards
  
• 95 percent of graduate students carried credit cards

So what's the lesson? Be aware and spend sensibly. Debt can sneak up on you quickly; it's called "creeping indebtedness." Below are a few tips to keep your debt in check.

• Use cash instead of plastic whenever possible. A lunch at the student union here, a night on the town there...it all adds up. Keeping your credit cards in your wallet will prevent a nasty surprise at the end of the month and when you graduate.
• Debit cards and "secured" credit cards are good alternatives for college students. Debit cards allow retailers to deduct the amount of a purchase immediately from a bank account; they also work at automated teller machines if a student needs cash. Secured credit cards require that the student set up a savings account of several hundred dollars as a backup against a default.
• Make sure you understand how fast the penalties for late payments and interest charges can add up on credit cards. For example, if you were making just the minimum 2.5 percent monthly payment on a $1,000 outstanding balance with 19 % interest, it would take seven years to repay and cost $730 in interest.
• The fewer credit cards you hold, the better. Remember, getting a free hat, Frisbee, or t-shirt to sign up for a credit card may end up costing you more in fees and interest than you expected.
• Don't forget your student loans -- the first bill may arrive as soon as one month after you graduate. You can think of "commencement" as the commencing of the education bills. You may have a hard time paying off your loan if you're too busy paying off your Visa or MasterCard accounts.