Managing Credit Card Debt in College

By Victoria Gospodinov

Credit cards can be a useful introduction into the world of personal finances and managing expenses in college, but a financial planning expert warns student cardholders to avoid excessive debt.

Alyssa Bedard, a financial planning associate at Ronald Blue Trust, said the number one tip she gives college students to control credit card debt is to set up an automatic monthly payment so that debt doesn’t build overtime.

“In order to avoid debt, it’s best to pay off the full statement balance each month if that’s within your means and this also maximizes your credit,” said Bedard.

Obtaining a credit card in college can be the first step in creating healthy credit card habits to stay out of debt and help increase credit scores and knowledge in the future.

Lauren Killeen, a University of Georgia student, said her parents found it important to get her a credit card in college for emergencies.

“I have a personal credit card that my parents gave me for emergencies only and so that I can make bigger purchases. For instance, my car broke a couple weeks ago, and I was able to use the card to call a tow truck and for other expenses, something I couldn’t have done with the money solely on my debit card,” said Killeen.

Despite being for emergencies only, Killeen’s credit card is helping build her credit score and credit line. Because she only uses her card for “out of the ordinary circumstances,” it can be easy to track payments, whereas bigger credit card spenders might have to track their spending more closely so as not to fall into debt.

Bedard said another important part of controlling debt is knowing what debt to prioritize. She said it’s important to look at the lengths of time each credit card has and to know their interest rates.

“When you apply for a credit card, look for the interest rate in the company’s terms or just call them to find that out,” Bedard said. “Whichever card has the higher interest would be the one you want to pay off first so that interest isn’t building over time.”

One of the most positive effects of controlling credit card debt early on leads to an improved credit score later in life, according to Bedard. She said the ability to make payments on time is one of the biggest factors in creating and maintaining a healthy credit score, which she recommends being around 750.

Students who don’t want to get into debt should assess their monthly usage relative to the amount of credit they have available, which also helps improve their credit score down the line, according to Bedard.

“An easy way to think about the rate is you don’t want to be in debt of more than 30% of what your credit line is,” she said. “So, if you have $1,000 to spend, then you wouldn’t want to borrow more than $300 on your credit card in order for it not to affect your score.”

Bedard added that controlling debt and keeping track of payment history is the most useful way to build a good credit score.

“Most students don’t realize how much actually goes into your credit score. If you want to go look for an apartment, if you’re buying a car or home, everyone looks at your creditworthiness and that starts with educating yourself on credit cards early on and not letting debt get out of hand,” said Bedard.


Victoria Gospodinov is a journalism student at the University of Georgia

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