The fastest growing group of Americans filing for bankruptcy is our young people. According to an article from Total Bankruptcy, recent surveys show that 10 percent of all people between the ages of 12 and 19 have at least one credit card—which could explain the increase in the number of young people filing for bankruptcy.
On average, student graduates leave school with between $3,000 and $4,000 in credit card debt (or more) in addition to the well-known student loan debt.
Marketing credit cards to college students has increased over the years: some colleges even allow credit card companies to market on campus, and some student fundraisers are tied to signing students up for credit card accounts.
Some states have enacted legislation to limit the selling of credit cards to college students due to the financial management problems they tend to breed. College students who are living alone and handling their own money for the first time find it difficult to keep track of charges to a credit card, compared to purchases made with cash, checks, and debit cards—in which the money is taken from their account immediately. This can become a serious issue for students, especially those who don’t have a steady income and are on a tight budget.
According to the article, experts say that people have a tendency to spend more money when using a credit card than when relying on the cash they have at hand. This increase in spending with a credit card occurs for several reasons: the inability to spend more when only a certain amount of cash is available, seeing how the balance in the bank declines every time a purchase is made, and the mentality that convinces shoppers they don’t need to worry about the cost if they can just pay later.
But the interest, late charges, and recently increased minimum payments on a credit card bill each month can make paying down the debt less manageable than the user expected.
The credit card debt that results from bad habits means working longer hours and lower grades for students, according to the article. Some are even denied graduate school loans due to credit card debt.
The bottom line? Don’t use credit cards to make purchases you couldn’t afford with just the cash you have in the bank, pay off balances regularly, and don’t use the card for small purchases like coffee—which tend to add up and result in a not-so-pleasant surprise when the bill arrives.
These simple credit card tips are especially important for college students who could fall behind the game they’ve only just begun. Debt and credit card problems can affect employment options, the ability to rent an house or apartment, and more. In the worst cases, it can lead to bankruptcy.
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