Information on Student Loans and Credit Cards
Credit Card (Photo credit: 401(K) 2013)
As a prospective student for college, one concern you probably have is paying the university bill. It can be next to impossible to afford all of the books and tuition fees that are going to be coming your way. However, taking out credit cards and student loans may not necessarily be in your best interest. It can be tempting to get lump sums of money through loans and be able to buy things that you pay off in smaller increments, but credit cards and loans can cause major debt problems later on in your life if you aren’t careful.
The Scoop On Credit Cards
Credit cards are very common and many people have at least one- I have three! Credit cards are great when used only for emergency situations, like having car repairs done when you don’t have the money for it all or buying a new kitchen appliance when it breaks down suddenly. The problem that a lot of college students have is that they apply for credit cards and use the card for virtually everything and anything they need. From facial cleanser to the next high-tech tablet, a lot of younger adults think that their credit card is like getting free money.
The problem starts when you need to start paying these credit cards off. The high-tech gadget and makeup supplies you put on the card is going to need to be paid off in small increments over a matter of months. What’s more, you’re also going to be paying back a lot in interest with each payment that you make. Credit cards, in particular, tend to have very high interest rates. An interest rate is a small percentage of money added onto your bill by the credit card company that needs to be paid back. In the end, you essentially pay more for the items you bought using your credit card than they were actually worth just because of interest alone.
What About Student Loans?
Student loans are also causing many college grads to go into debt as they begin their new life in a financial bind. Student loans enable you to receive a lump sum of cash that can be used for tuition fees and books necessary for you to attend college. All loans have different policies, but you should expect to pay back the loan upon graduation. The problem comes when most graduates have difficulties actually finding a good-paying job once they get out of college. A lot of grads are working in fast food joints and coffee shops because their career field is hard to break into.
Just think of working in a coffee shop and being paid minimum wage but also having a ton of student loans and credit cards to pay back. This is a major reason why so many college graduates are moving back home with their families, simply because they cannot afford to do anything but pay back their loans and credit cards. This is definitely a debt problem that millions of people are facing in their day-to-day lives.
When it comes to attending college, you need to know what your options are before doing anything drastic. Applying for and receiving a credit card is very easy and you don’t even have to have a good credit score to get one. Because of how easy it is, many new students are falling for the illusion of what a credit card offers and do not think of the debt problems that await. Know what is available to you and focus on making smart and long-term financial decisions that will not cause you to go into debt upon graduation.
Category: College, Student Loans
