Battling Credit Card Debt

Let’s be honest: You are eventually going to own a credit card – and probably several. However as a student, is credit card debt a necessity or something you should avoid? Truthfully, there is no single right answer that works for everyone. So rather than try to tell you whether or not you should incur a lot of credit card debt, let’s look at the good points and bad points, and let you decide for yourself.

Good points of credit card debt:

1) They are much more convenient to keep with you and to use than cash (and much easier than writing checks).

2) Students tend to have a lot more emergencies that come up: Cars that break down, tuition that’s past due, etc. Credit cards provide a good source of emergency money for crisis situations.

3) It’s safer to carry a card than it is to pack your wallet or purse with cash. If you lose your card, you can just report it to the bank and hopefully not be out any money.

4) Paying your credit card bill on time each month will increase your credit score, which will help you when you’re ready for a major purchase such as a house, new car, etc.

5) A lot of cards have benefits that might interest you, such as rebates, frequent flier miles, and more.

6) And of course, credit cards give you the means to pay for items for which you might not have enough cash at the time.

CAUTION: Credit card debt in these situations should be a rare thing.

On the other hand…

Bad points of credit card debt:

1) Yes, they are convenient to use . . . and for many students, that’s a problem. If you’re not careful, you’ll find yourself owing more than you have coming in.

2) Yes, it’s true that if a credit card is stolen, you’ll save your money by reporting it stolen to the bank. But what if you don’t notice it’s been stolen for a few days? In that short time, the thief could run up quite a large tab, billable to you, of course.

3) If you’re not good at handling your bills, or perhaps you’re a procrastinator, your late card payments will lead to a poor history. This will damage your ability to buy big-ticket items in the future.

4) Sometimes for young people , just getting into the game, interest rates can be quite high.

5) If you’re typically late paying your bills, you’re going to find yourself paying a lot in penalties and interest for your credit cards.

Now, armed with this information, it’s up to you to make the right choice for yourself.