College Students and Credit Cards - Avoid the Financial Traps

After years of hardship, bad exam nerves, toiling away in libraries and lectures, you are finally graduating from college. It feels awesome, even though it´s been one of the best periods in life, all new friends and the social gatherings at the students house. And everything seems perfect: You're leaving college with worldly knowledge, a prestigious degree, a future without limits and an enormous amount of credit card debt!!??

Unfortunately, this is the case for many graduating students. 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. According to Nellie Mae, a leading provider of higher education loans, a study of last year's student loan applicants showed:
Graduate Student Credit Card Debt
- Students with no Credit History 1%
- Students with a Credit History having no Credit Cards 4%
- Student with a Credit History and had Credit Cards 95%

Of the 95% who have credit cards:
- Average number of credit cards = 4
- Average credit card debt = $4,776 (median=$3,068)
- 20% have credit card debt between $6,000 - $15,000
- 6% have credit card debt greater than $15,000 Undergraduate Student Credit Card Debt - Students with no Credit History 12%
- Students with a Credit History having no Credit Cards 10%
- Student with a Credit History and had Credit Cards 78%

Of the 78% who have credit cards:
- 32% have four or more cards
- Average number of credit cards = 3
- Average credit card debt = $2,748 (median=$1,236)
- 13% have credit card debt between $3,000 - $7,000
- 9% have credit card debt greater than $7,000

So what's the lesson?

It´s doesn´t necessarily mean that you spend too much money, that´s your own private issue. It´s about being aware and spending sensibly, with a wise use of your credit card.

Debt can sneak up on you quickly. 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. Don't forget your huge student loan. You may have a hard time paying off your loan if you're too busy paying off your Visa or MasterCard accounts. Establish a sound credit history by clever usage and investigate thoroughly the credit cards that are especially intended for students, or maybe even choose a debit card! Be smart - use credit card wisely.

Article Source: http://www.debtfinancearticles.com.

About the Author:
Thomas Lindstrom is author and researcher on buy tips and use advice for different kind of credit cards available on today´s market.