Credit card debt can make your life miserable. It can weigh down your finances and make it hard to make ends meet. Even if you’ve only had to put a few thousand dollars on your credit cards because of an emergency, it can take many months, or years, to pay that debt off.
One group of people who is at risk of ending up in over their heads with debt is college students. College students may not be aware of how fast interest rates add up, or they may overestimate their ability to pay back what they spend.
A June 11 report states that an education tech company, EVERFI, that surveyed over 30,000 college students found that around 36% of students had over $1,000 in credit card debt. On top of that, around 50% of college students admitted that they weren’t sure that they would be able to manage their money, indicating that they were not prepared.
The major problem with credit card debt is that it comes with high interest rates. It’s harder to get ahead on debt when a card charges 20% or more in interest annually. Penalty rates can be as high as 30%, which can devastate students, too.
What can students do to avoid credit debt?
One piece of advice is to take out more in student loans if you need cash. Why? The interest rates are lower. If you have to take debt, make sure you find the lowest possible interest rate and try to guarantee that it’s locked, so it won’t increase in the future.