Lenders are happy to lend to students. College credit cards are available at every turn on campus. And students are happy to borrow. The fact that most college students are young and out on their own for the first time says they have limited financial experience. Lenders know many parents will bail out their kids if their debt grows too large. They offer plastic at lower standards than the average person can qualify for. Thankfully there are other ways of getting out of debt, just in case your parents can't foot the bill. Here are three steps.
Step One: Change Your Plastic Habit
The only plastic in your wallet should say DEBIT on the front. Debit cards draw money directly from your account so you aren't spending what you don't have. Make sure your bank will stop your withdrawals at a zero balance. Many banks will let you keep spending and than charge you huge fees. Also, credit is not necessarily bad. Credit is a good tool to increase your financial flexibility. The key to credit: use modestly and wisely.
Step Two: Lower Balance Rates
Tired of making payments and watching your balance barely budge? This is because your interest rate is so high you are getting killed just to make it to the next month. But you have some options. Credit card companies don't want to have to take a loss on the balance or lose you as a customer. Their is a good chance that you can get your rates lower just by calling your company and explaining your situation. If they don't lower your rate out of mercy, you have one more course of action at your disposal - make a threat. Websites such as CardWeb.com and Bankrate.com list current credit card offers and rates. You can often find cards that will let you transfer your balance and have a 0% APR for months or up to a year. You have the choice of applying for these new deals or threatening to leave your current lender unless they can match.
Step Three: Attack your Balance
Do whatever it takes to lower your balance. Remember: run for the door when the bar tab is due. Tackle your high interest debt first and work your way down the line. Always pay the minimum amount on each card (assuming you have many) so you don't ruin your credit. Creditors have been known to jack up rates on customers who miss their due dates. Bankrate has a debt reduction calculator to help you get on a schedule. You just punch in your numbers to figure out how long it will take to pay off your bills.