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How to take control of credit card debt while you’re still in college

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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.

Repayment calculator

Your current credit cards:

Amount Owing

APR

Card 1

Card 2

Card 3

Card 4

Card 5

Card that you are transferring to:

Intro APR

Intro Term (months)

Ongoing APR

Balance Transfer Fee

Annual Fee

Your monthly repayment
$500

 
 
Critical
At this rate, you will not pay off your debt.
 
Recommended
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
12 months

Without a balance transfer
15 months

Money saved transferring debt to a balance transfer card:

Savings = $1,000

By moving forward with a balance transfer credit card and transferring the maximum amount, you could be saving $1,000 on fees and interest charges.
You will save an infinite amount of money as you will not pay off your debt on your current cards at that rate.
In this case, a balance transfer card is not the best option. You might want to consider a personal loan to help consolidate your debt. You can find out more here.
Disclaimer: Whilst every effort has been made to ensure the accuracy of this calculator, the results should be used as indication only. Certain assumptions have been made around the repayments made. This calculator is neither a quote nor a pre-qualification for a credit card

Our pick for balance transfers: Blue Cash Everyday® Card from American Express

  • Earn a $150 statement credit after you spend $1,000 in purchases on your new card within the first 3 months.
  • 3% cash back at U.S. supermarkets (on up to $6,000 per year in purchases, then 1%).
  • 2% cash back at U.S. gas stations and at select U.S. department stores, 1% back on other purchases.
  • Low intro APR: 0% for 15 months on purchases and balance transfers, then a variable rate, currently 15.24% to 26.24%.
  • You spoke, we listened. Over 1.6 million more places in the U.S. started accepting American Express® Cards in 2018.
  • Cash back is received in the form of Reward Dollars that can be easily redeemed for statement credits, gift cards, and merchandise.
  • No annual fee.
  • Terms apply.
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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.

Snowball method

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:

  1. Start making minimum payments on all debts, except the smallest.
  2. Pay as much as you can on your smallest debt and repeat until you pay it off.
  3. Move on to the larger debt while still paying the minimum payments on your remaining debts.
  4. 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.

PaymentsMonthlyWeekly
Monthly debt$400$100
Total yearly payments$4,800$5,200

Seek help

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.

Bottom line

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.

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