Many Colorado high school students have recently graduated and are now planning fun summers before they head off to college. While some will work to earn money for their higher education tuition payments, others will travel to spend time with family and friends. When the time comes to move out and begin life away from home, many will be caught in a new and sometimes scary world of personal and financial freedom.
College is often the first time a student acquires a credit card. Whether with a co-signor or on his or her own, a credit card is often a quick way for a young adult to make needed purchases when money is not readily available. Some students fail to recognize the dangers of overusing credit cards and get into financial challenges with credit card debt.
There are a variety of ways students mismanage their credit cards. One way they lose control over their debt is by failing to bring their balances back to zero each month. Credit card balances often carry with them high interest rates that balloon payments up to unreasonable amounts.
Another problem students can have with credit cards is simply not making any payments on them. Failing to make credit card payments can set a person up for financial challenges down the road since missed payments can impact one's credit score. Though it can be hard for students with no or little income to pay down their credit obligations timely payments are necessary for credit health.
On the other side of overusing a credit card is the problem of not acquiring any credit at an early age. The sooner a person can build a strong credit history the better his credit score will be as he ages. While credit cards may seem like a heavy responsibility for young people, they can be a good first step toward learning responsible financial management and personal accountability.
Source: Fox Business, "6 Credit Card Mistakes Students Make," May 22, 2014