Credit Cards Teaching Students a Costly Lesson

Credit cards are not always as helpful as students expect. College students who are obtaining their first credit cards have found that the debts can grow quickly and often get out of control. By the time students will graduate, many will end up turning to credit card debt help to manage the unexpected situation of high debt. Understanding the downsides of credit cards can make it easier for students to avoid making some expensive mistakes relating to credit cards.

Interest Charges:

Credit cards often have a high interest rate. This is particularly true of student credit cards because college students rarely have well-established credit histories. This means that they are considered a high risk group.

Due to the high interest rates, students can find that the debt builds up and payments never seem to put a dent in the debt because most of the monthly payments are interest charges. This means the debt is building even when students are not necessarily making purchases.

High Fees:

Another downside of credit cards that students do not always expect is the high penalties they might face. Late fees, over-limit charges and other miscellaneous costs add up quickly. Students who are new to credit cards can find that the charges for getting behind or accidentally going over the limit add up quickly and often make the debt difficult to manage. This cost is very high for many students who might only have minimum wage jobs while working through college.

Time to Repay:

Making the minimum payment on credit cards can result in paying for several years before the card is paid off, even when it is not used. Since most of the payment will go to interest and any other added charges before touching the principle, students can find that they are paying on the same card for well over ten years before the debt is fully repaid. The time it takes to repay the card can sometimes cause students to pay for the same card well into their 40s if only minimum payments are made each month.

Students across the country are learning a difficult lesson about the negative side of credit cards. The high interest coupled with expensive fees and added charges often results in paying more than students can afford to manage the debts. Even the most responsible students can find that credit cards are a costly debt that is difficult to manage without help.