Plan your finances and stick to your budget.
If you’re a college student with a credit card debt, you’re not alone. According to the Experian College Graduate Survey Report done in 2016, college students have a credit card debt of $2,573 on average.
Clearing your debt may seem overwhelming, especially when your mind should be focused on studying. But with decent budget management, you can be debt-free in no time.
Evaluate your credit card debt
Before you take control of your debt, you need to map it out. Take a pen and paper and write out:
- Which credit card provider or providers your debt is with
- How much money you owe on each card, if you have more than one card
- Your minimum payments
For your convenience, we created a repayment calculator to help you find out the amount you’ll need to pay.
Your current credit cards:
Card that you are transferring to:
Intro Term (months)
Balance Transfer Fee
Your monthly repayment
At this rate, you will not pay off your debt.
At this rate you will pay off your debt during the card's intro period
At that rate you will not pay off your debt. You will need to make higher repayments.
Months that it will take you to pay off your debt:
With a balance transfer
Without a balance transfer
Money saved transferring debt to a balance transfer card:
Savings = $1,000
Our pick for balance transfers: Blue Cash Everyday® Card from American ExpressRead more
Build a budget
This will give you an overview of where you spend your money. Once you have your budget set out, adjust and minimize unnecessary spending. But don’t nitpick when doing this; focus on the long term. You’re trying to pay off your debt as soon as possible.
Design a plan that fits your finances
Everyone’s financial situation is unique. Someone could have higher debt than average, another could have a lower income. Whichever group you fall in, you still have options.
Balance transfer credit cards
This type of card comes with a 0% intro APR period on balance transfers, meaning you save money on interest, which can help you pay off your debt faster.
However, student credit cards typically have a shorter intro APR period — usually up to seven months. Also, for every transfer you make, there’s likely going to be a balance transfer fee. Keep an eye on these two factors if you’re set on getting a balance transfer credit card.
You’ll also want to mind how much you can transfer onto the card. If you have multiple balances you want to consolidate, you’ll likely need a higher limit than if you were just transferring one.
Debt consolidation loans
Debt consolidation loans could be another solution. Especially if you have higher balances or if you owe money to multiple accounts.
If you opt-in for a debt consolidation loan, you can combine your debt from all accounts into one monthly payment. This could potentially lower your monthly payment and help you pay off your balance.
The snowball method is a debt-reduction strategy designed for those who owe money to more than one credit card account. This is how it works:
- Start making minimum payments on all debts, except the smallest.
- Pay as much as you can on your smallest debt and repeat until you pay it off.
- Move on to the larger debt while still paying the minimum payments on your remaining debts.
- Once you pay off the larger debt, move on to the next until all debts are paid off.
Make weekly payments when possible
If you’re receiving a weekly or bi-weekly paycheck, consider switching to weekly payments instead of monthly. To start off, divide your monthly payments by four. For example, if your monthly payment is $400, you have to make a weekly payment of $100.
The logic behind this is that most months have four weeks, while some have five. For the months that have five weeks, you are actually skipping one potential weekly payment when you pay $400 instead. With weekly payments, you would pay $500. That’s four weeks skipped in a year.
|Total yearly payments||$4,800||$5,200|
If all else fails, seek help. Friends and family should be your first choice, but you can also reach out to professionals who can help you out. You may be surprised how far asking can get you, even if it takes a hit to your pride.
Negotiating with creditors
Most of the time, you can negotiate your credit card terms, interest rates and payments. But this typically depends on the credit card company and your personal situation.
The most important factor here is timing. You’ll have more success if your credit score is good and you’re not behind on your payments. If your bank won’t budge, you can say you’re planning to move to another bank for better terms.
But if you’re already late on your payments, or you know you won’t be able to make your payments on time, it’s typically best to be honest about your situation.
Create better financial habits
The best way to pay off your debt and to avoid it in the future is to improve your financial habits. This includes:
- Keeping to your budget. This should be a general guide, which you can update or adjust as your needs and income fluctuate.
- Setting up automatic payments. If you’re busy and you can’t keep track of your due dates — set up auto payments or reminders. This can help you avoid unnecessary fees and interest.
When you’re in college, it’s easy for your credit card debt to pile up. Not many have the experience and the necessary income to get through debt free.
But by making a budget and a plan of attack, that are then paired with a balance transfer credit card, a debt consolidation loan or frequent payments, you could pull it off.