Defeat the Credit Crisis-101

Americans are in credit card debt – some quite deep.  Statistics show that the average American carries an average of $10,000 in credit card debt.  That’s a lot of money!  We are an instantaneous society meaning we want what we want when we want it.  So when a consumer has a credit card, it’s often easy to just whip out the piece of plastic and charge purchases.

It"s not that we don’t intend to pay the bill – at least most of the time.  Most people have good intentions when it comes to their credit card debt.  They’ll pay the bill when they get their next paycheck, they’re expecting a cash windfall and they’ll pay the balance in full then, or they figure they can always make payments.  But sometimes life happens and circumstances step in preventing people from paying down their credit card debt which is how many people get into trouble.

Credit card companies like this and they constantly deluge us with offers of low financing rates with high credit limits all in the hopes that they will run up a debt and then have to pay finance charges which is how they make their money.  And those credit card offers are coming to people at younger and younger ages.

It’s not uncommon for a new high school graduate to get a credit card offer that they send in for.  Many of these young people love the feeling of being able to charge merchandise without having to pay for it at the time.  Many of these young people are also not financially savvy and the credit card debt piles up rather quickly.

If you find you have gotten yourself into a problem with credit card debt, it’s important for you to take steps right now to take care of it.  That means you need to pay down that debt as quickly as you possibly can until you can achieve a zero balance.  Probably the best idea to get out of credit card debt is to cut up the plastic and then make the largest payments you can for as long as you can to help take care of the problem.

Credit card debt is a fact of life for many Americans and it can affect credit ratings which can cause denial of a loan for a car or a home.  Get out of credit card debt as soon as you possibly can.  It will reflect well on your credit report and make potential future lenders trust you more as a good credit risk.

College students are running up an alarmingly large amount of credit card debt these days and it is only increasing with the passage of time.  The average undergraduate student carries $2,500 in credit card debt and by the time they graduate from college, they are beginning their new lives in the “real world” with debt that they can’t pay.

Students figure: I'll live like I want to now and then when I get a job it will be easy to pay it back.  This is often not the case.  Lower-than-expected salaries, plus higher-than-expected living expenses and hefty student loan payments, make handling credit card debt all the more difficult for students and recent grads.

The worse part about college students having so much credit card debt is that it takes so long to pay it off.  Even if they are able to make the minimum payments, by sticking to minimum payments it would take a student more than 12 years and $1,115 in interest to pay off a $1,000 bill on a card with an 18 percent annual rate.  If students fall behind in their payments, they get slammed with high late fees. And it's easy for things to get out of hand.

Of course, there are two sides to this story.  Most college students start out with little and even no credit, so having a credit card seems like a good idea so they can start building a credit history in anticipation of owning a new or better car and even, someday their own home.  Except for if they haven’t been warned of the dangers of using credit cards or are especially naïve, this could be a bad move.

Credit card debt for college students affects many, many aspects of their college lives.  They can’t pay their bills regularly and find themselves short of cash.  Plus, it can affect their ability to secure a student loan which can be crucial with ever-rising tuition rates.  And parents should beware of putting their college student on their own credit cars as an authorized user as the same debt can pile up under the parents’ names and cause some serious credit problems.

Armed with the right information, many students are able to establish credit and steer clear of card debt. Even though college students do carry credit card debt, 54 percent of college students pay off their credit card balances every month. Most tend to be responsible and use the card wisely.

However, some of them don't and they're getting into trouble. If a person makes it through 18 years of life without any financial wherewithal, it's very difficult to change their behavior and that's why it's so important that parents speak to their children about money management. To keep a college student out of credit card debt, the key is teaching students money management skills before handing them a credit card.