How to Manage Credit Card Debt as a College Student

Estimated reading time: 6 mins

Student loans put most college students in enough debt as it is, but that fact does not seem to have too much impact on annual college student credit card debt rates. There are several reasons as to why this happens, and those reasons range from financial mismanagement to practical emergencies. It is unfair to judge any college student’s credit card debt without knowing the exact circumstances and reasons responsible.

In fact, it isn’t uncommon for students to start relying on their credit card more than they should, simply because they don’t have enough money left with them after tuitions to meet their needs. As most of us are well aware of, getting rid of heavy credit card debts is much easier said than done, especially when you are still a young college student. Despite the odds though, there are a few proven ways in which students can make it much easier on themselves to pay off their credit card debts. Let’s look at some of those credit card debt management tips next.

Use a Debt Management Service

Debt management services can make it a lot easier to pay off credit card debts, but that is provided you choose the right one. There are several different types of debt management services available, but they are not all designed for students, nor are they all ideal to pay off credit card debts. To manage credit card debts, sign up with Tally, which has a dedicated debt management app and service that is perfect for college student credit card debt.

Tally is designed to help students simplify, reduce, and pay off heavy credit card debts fast. If your application is accepted after signing up and adding your credit cards, they will extend a personalized line of credit at low interest rates to pay off all pending credit card bills at once. Their interface will display exactly how much money and time you stand to save by switching over to their significantly lower rate of interest. 

Reduce Your Total Tally of Credit Cards

After paying off the college student credit card debt previously accumulated, you will now have to pay just a single bill. This simplifies things, but you cannot continue to spend through your credit cards in the same way that you did before, because that would eventually land you in another, more expensive debt. To avoid being in such a situation again, note down the credit cards you have at this point and their respective interest rates, annual fees, late fee rates, additional charges, etc. Now, cancel the most expensive credit cards as soon as you can.

It’s true that having access to a large loan amount by combining the limits of multiple credit cards is a good feeling to have, but it’s not financially accurate. It’s an inaccurate estimation because credit card debts and standard long-term loans are incomparable. If you ever need to max out any of your credit cards, and you can’t pay the bill in time, rest assured that you will eventually be paying a lot more to your credit card company than the amount you borrowed from them. So, curb your expenses if you must, cancel some of your credit cards, and keep their usage as limited as possible.

Multiple credit cards also affect your credit score negatively since credit cards are listed by the credit bureau as unsecured loans. Just the very fact that someone has too many unsecured loans in their name is sufficient to pull their credit scores down. Unpaid credit card debts only add to the problem and pulls your credit score down even further. 

It may not be possible for everyone to cancel multiple credit cards at once but reducing the number down as low as possible should still be the goal here. Paying all due credit card bills and closing some of those unsecured loans should push your credit score back up again. Loan applicants with high credit scores are charged the lowest interest rates, so future debts (if any) will be easier to pay off.

Always Pay the Minimum Amount Before the Due Date

Most, if not all credit card companies bill their customers with a minimum due, as well as the due date clearly mentioned. You should pay the entire due every month, well before the last date. Even when you are unable to make the payment in full, never fail to pay the minimum due amount on time. Try to pay more than just the minimum due amount on months that you can afford to, but never miss a payment.

Although it’s not exactly a comprehensive solution, it’s part of the college student credit card debt management strategy. Students who manage to pay the minimum amount in due time will find that their credit card debt is growing at a much slower rate than it would have, otherwise. As long as you are paying the stated minimum due amount:

  • The remaining balance will not be charged interest at a higher than usual rate.
  • There will be no late fees to cover.
  • Your credit score will increase, instead of being negatively affected.

The credit card company will still charge you at their hefty interest rates for the balance every month, but that rate will not continue to rise any higher than it already is. As to what the minimum due will be, this depends entirely on:

  • How much was billed.
  • The percentage your credit card company uses to calculate the minimum due.
  • Any additional fee, finance charge, etc., that might be levied by the credit card provider.

You should be able to calculate the minimum due well in advance by factoring in the above. Use a credit card minimum payment calculator to estimate the minimum due amount in advance, if you are having trouble figuring it out manually.

Convert the Balance into Equal Monthly Instalments

Reach out to your credit card provider and ask if they have an EMI plan. Most of them do, especially for a college student credit card debt. Note that if you will still have to pay their high interest rates and depending on how long the plan lasts, you could end up paying more in interest than the principal debt! However, a longer timeline to pay back the credit card debt with fixed monthly instalments does make things comparatively more manageable.

It is advisable that you stop using that particular credit card until the debt is paid off in full. If you keep using the same credit card just as always, the EMI scheme is not the most ideal option for you. The EMIs will only increase your minimum due amount every month. It will now be calculated by adding the minimum due from your post EMI expenses + the fixed EMI amount.Having multiple debts is not how anyone should start their new career after college. Irrespective of the reason(s), all credit card dues should be paid back as soon as possible to avoid being penalized with increased interest rates and additional late fees. Besides, the longer you take to pay back a credit card company, the more money you will lose because that debt will only grow bigger with each missed payment.

Check out these similar posts:

Leave a Comment

Please note: if you are making a comment to contact me about advertising and placements, read the Advertisers page for instructions. I will not reply to comments about this subject.

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.

Scroll to Top
How Am I Doing?

Did this discussion solve your problem?

Then please share this post or leave a comment.