Are You a Student with Credit Card Debit?

A Credit Article Contributed by Stephanie Litaker

The woes of student credit card problems

Credit card companies know they can find many customers in students, and they have no problem following through on that. However, many students with credit cards don't realize how easy it is to just buy whatever they want and forget about the other things they bought. This is a problem because students rack up credit card debt rapidly, without thinking of the results they will eventually have to deal with.

I'm falling behind on my student credit card payments, what will happen to me?

If you unfortunately fall behind on your student credit card payments, you will face some penalties from your credit card companies. More than likely, the annual interest rate you pay will be increases - perhaps largely - and you will face late payment fees. Beyond the initial and long-term monetary damages you will face, other bad things will happen.

While you're probably not happy about paying more, you will also receive a negative mark on your credit history, which will most likely stay there for seven years. What's that mean? That means that you will face troubles renting apartments, buying cars, buying homes, and you may even face troubles getting a job. This could mean problems of several types.

Also, college students with large credit card debts will sometimes be forced to cut back on their class load in order to work more so they can pay their bills. While it's not the best situation, it's a somewhat harsh reality. And still other students are forced to quit classes totally until they pay off their credit card bills.

Why so many college students develop credit card problems

While some may dispute these factors, it's generally accepted that the four main reasons students get in trouble with credit card debt is unaffordable credit limits, education expenses continue to increase, they are pressured by their friends to spend money even when they don't have it, and they are inexperienced with handling credit.

The availability of credit cards for students has increased across the nation on college campuses, as is evident by the figure that the average amount of debt has grown from approximately $1,200 in 2000 to nearly $1,800 in 2004. Obviously, these numbers show that students know credit cards are out there, the creditors are willing and able to give them credit lines, and students are having no trouble using them at all.

With these problems, should students avoid credit cards?

As hard as it may be to believe, college students should in fact develop a credit history. Actually, college students should not graduate without having a credit card and credit history whatsoever. Why? Because as young adults, it's important to develop good spending habits, and it's also important to be able to show future creditors that you can be trusted to repay the money you've borrowed.

Unless you have a credit card, you've used it, you've paid your bills on time, and you have been responsible with it, creditors have no idea if they can trust you. It's also necessary if you want to rent a car, reserve a hotel room, and may even be necessary to get car insurance.