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Financial Fitness For College Students

Updated on August 28, 2015

Sitting in the cafeteria you happen to notice a very brightly colored poster. Later that day, a representative from a financial institution will be hosting a seminar on banking and you are keen to check it out. You’ll only admit to yourself that the real reason you’re interested is because the poster mentions something about a credit card.

Credit Cards And Student Loans

The very first thing a banker will tell you when they want to sell the credit card, or any other loan for that matter, is that it’s affordable. Legally they are obligated to tell you the total cost of finance, however, the chances are good that the low monthly instalments are emphasized during the conversations. A student loan is a little bit of a Catch 22 situation, as you require this to start generating a decent income in order to pay off your debt. Bankers will convince you that the credit card is a great way to get your credit score up, but what is very rarely mentioned is the way it affects you when you miss a payment or two.

The danger of owning a credit card is that very few people actually use it the way it is supposed to. Due to the revolving nature of the facility, if you happen to use it every month you are very likely to get stuck in debt for the rest of your life.

Paying The Minimum Amounts

The nature of these debts is that they are designed to be paid at the lowest possible instalment that if honored, will reduce the capital amount outstanding. The percentage, unfortunately, is marginal. That means that you will pay your debt for years without the capital balance outstanding even budging more than a few inches. By paying a bit extra every month, the possibility of you paying off your debt at a reasonable rate becomes more likely. If you are unable to afford paying a bit extra, you should probably refrain from getting into debt in the first place.

Taking On A Job

Many college students are able to juggle college life and a job as tuition is expensive and not everyone qualifies for study loans. If you happen to have a study loan and you have a job, try paying in as much as you can already to take some of the pressure off after college. Savings should be a focus. Try saving at least 10% of your income into an account you can’t access readily. Another 10% should go into giving back to the community in any way possible.

College students often feel that the only part-time jobs they can apply for are servers at a restaurant, flipping burgers or tending bars. Try looking out for jobs that allow you to be a freelance worker, for instance, photography, graphic design or writing. These can earn you a decent living and can comfortably be squeezed in between all your other projects.

Defaulting On Your Debt Or Paying Late

If you’ve decided to go the debt route, you need to know that a few mistakes here can tarnish your financial records for a very long time. Paying late or skipping installments is frowned upon and when you’re done with college, you may find it difficult to obtain finance. Always pay before the due date and ensure that you’ve paid at least the minimum installment. Something to remember is that you may also start paying a much higher interest rate on your debt, over and above the penalties that are charged for late payments.

Debt may seem like a ready solution to a lot of people, but once you start getting into the habit it is very difficult to get out of it. According to nationalpriorities.org, as at January 8th, 2015, the US alone was in $ 18.1 trillion debt.


Students Worried About Debt More Than Studies

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    • Haley Keller profile image

      Haley Marie 

      3 years ago from Indianapolis

      This is some great advice. I'm currently a college senior, and I have yet to actually own a credit card. I get by with my debit card, and I don't really have any plans to even get a credit card unless it seems to be absolutely necessary, which I'm hoping will never be the case. I actually took a finance class in high school that managed to completely scare me when it comes to credit cards, which I think is what they were going for. I already have my student loans to pay off, and I really want to avoid having any more debt than that.

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