Managing credit card debt is highly stressful (especially if you’re a college student). Even if the debt is little, you’ll still have to pay it off. So, how to deal with credit card debt and mange debt of any size?
Credit cards can be helpful during times when money is tight, but they can also be a slippery slope. If you aren’t able to pay your credit card off in full each month, you’ll be hit with heavy interest payments. That $20 night at the pub with friends could end up costing you hundreds if you don’t manage your card.
6 Best Ways to Manage Credit Card Debt
If you’re a college student struggling to make it through, here are some helpful tips for managing credit card debt.
1. Choose the Right Card
A lot of college students will choose the card that’s easiest to secure. However, you need to take the time to look at your options and choose the right card for you. Plenty of financial institutions offer student credit cards. It’s up to you to read the fine print and ensure that it will be beneficial to you over cards that are marketed to non-students.
When choosing the best credit card for you, consider your needs and goals. Look at alternatives to credit cards for longer-term loans, such as a student line of credit.
2. Keep a Low Limit
One of the best ways to build a credit score without falling into credit card debt is to keep a low limit. This is a fantastic option for college students who feel they don’t have the willpower to manage their debt. With a low limit, you’re more likely to consider your spending as that maxed-out status will come to a lot quicker.
As a rule of thumb, don’t take a credit card that has more than a $1,000 limit for college. Scholarships, bursaries, work programs, and lines of credit should be exhausted before using credit cards to pay for school.
3. Track Your Credit Score
For many college students, getting a credit card is the first foray into building a credit score. If you haven’t had any credit-eligible bills in the past, there’s nothing to base a score on.
Keep an eye on your credit score and watch out for negative items. The sooner you can work on removing negative items from credit reports, the better.
4. Be Intentional With Spending
For many, college is a time to let loose, make new friends, and experience new things while pursuing an education. It’s easy to keep swiping to support those experiences, even when the funds aren’t there to support it.
When you take on the adult responsibility of getting a credit card, you need to be intentional with your spending. Consider where your money is going and take the time to look at your statements each month. Use an app like Mint to set a budget and send you notifications when you’re overspending.
Remember to look at the bigger picture. You might set a responsible goal of only using your credit card to buy groceries. But, are you forced to use your card for groceries because you’re spending too much elsewhere? Look at all the angles when spending.
5. Learn to Say No
As a part of spending intentionally, you’ll need to learn to say no. This is an unfortunate reality when trying to get through college without credit card debt following you to graduation. Set boundaries with friends who don’t have credit cards and ask to use yours for things. Pick and choose where you’ll spend your money and what events add value.
Learning to say no doesn’t mean missing out on everything. You might choose one event per month to attend. You can put stop-gap measures in place by leaving your credit card at home and having a set amount of cash to spend.
6. Have a Pay Down Plan
Finally, have a pay-down plan. Ideally, you’ll only have one credit card to get through college. If you have multiple cards, you’ll need to evaluate how you can amalgamate that debt. Otherwise, start with the highest interest cards and work your way down.
Make a goal of leaving college with fun memories and a foundation for your future, not credit card debt.