College Credit Card Debt

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College Credit Card Debt

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Half of all college students have four or more credit cards.

Like everything, there is a time and place for using credit cards. They allow students to build up their credit scores, as long as they can steer clear of potential risks.

Anyone should be leery of anything offered as free, to pay later. Especially impulsive college students who need school supplies, bubble gum and whatever else a college student would spend money on. But nothing is free.

For example, if Jane uses credit to buy something on sale and then doesn’t pay the balance for two or three months, she would end up paying much more than the sale price of the item.

  • Jane paid sale price for it;
  • Jane thinks she’s getting a bargain, but…
  • Jane doesn’t have the money to pay for it;
  • It’s no bargain because Jane ends up paying interest and late fees on it.

Personally, I recommend using a debit card instead of a credit card. That is how a bright-eyed future doctor can live within his or her means.

The minimum age to obtain a credit card is now 21 years old.

Some people might argue that all that does is load students with debt right before they graduate. But if they are smart and use their cards for emergencies only, they won’t face the prospect of adding even more debt obligations on top of student loans.

60% of students borrow annually to cover tuition and fees.

No one wants to graduate from college with extra debt – debt that is often largely composed of fees, “convenience charges” and, of course, interest.

Interest for credit cards is usually expressed as APR. APR stands for Annual Percentage Rate, and is simply the finance charge for a loan or credit card expressed as an annual rate. The true APR of a credit card is often masked by introductory interest rates.

So anyone applying for credit should read the fine print. A missed payment may lead to double or triple the interest rate – just for being late. Even if it is by one day.

Interests rates can go as high at 29%. Talk to your college student about interest and the penalties of defaulting on credit card debt. And whatever you do, don’t cosign credit cards – save that for the fun world of student loans!

Judith HeftJudith Heft, Principal, Judith Heft & Associates is a personal financial concierge with offices in Greenwich and Stamford. She can be contacted via email at or by phone 203-978-1858.

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