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College student credit card debt is fairly common with more college students turning to credit for their spending needs. In fact, according to the 2019 Money Matters on Campus Report, nearly 30% of college students have more than $1,000 in credit card debt. While just 34% of students report using a credit card during their first two years of college, that number jumps to 65% by graduation and 82% by grad school.
Clearing your balance may seem overwhelming. With solid budget management, however, you can work toward being debt-free and setting yourself up for a bright financial future.
To start, map out your debt. List the following with a spreadsheet or a simple pen and paper:
Now that you know exactly how much you owe, you can start figuring out how to tackle your debt.
There are several strategies to clearing debt, and the right one depends on factors like your level of debt and how quickly you want to pay off your balance. Below, you’ll find a few tried-and-true strategies. Pick the one you like best and stick with it.
This type of card comes with a 0% intro APR period on balance transfers. It’s almost like pressing “pause” on your interest, which can help you pay off your debt faster. Transfer your debt to a qualifying card, then pay off your entire balance before your intro APR expires. This strategy is typically a better choice if you have a relatively small amount of debt that you can clear out in a year or less.
Student credit cards usually have a shorter intro APR period than other cards — often around six months. Look for balance transfer fees and transfer limits when comparing comparing balance transfer credit cards.
With the snowball method, you’ll first pay off the credit card with the smallest amount of debt. After you do that, pay off the card with the next-smallest debt, and so on until all debts are cleared.
The idea behind this strategy is you’ll become even more motivated to tackle your debt each time you completely pay off a card. It’s not the method to use if you want to pay the lowest possible interest over time, but it can be helpful if you need a psychological boost.
With this method, you first pay off the credit cards with the highest interest rates. For example, if you have one credit card with a 17% APR and another with a 22% APR, you’ll pay off the one with the highest interest first. While you might not get the same quick wins as you would with the snowball method, you’ll pay less interest in the long run.
Once you determine the method of paying off your debt that works for you, figure out how much you’ll pay toward your balance each month. Use our repayment calculator below for help with this, inputting details into each section:
Once you have your monthly payment, resolve to put it toward your credit card debt consistently. You could be out of debt faster than you think.
After selecting an overall debt-reduction strategy, see if you can stack the odds even more in your favor. Consider these tactics:
If you receive a weekly or biweekly paycheck, consider using this method. Take the monthly payment you want to put toward your debt, and divide it by four. Pay this amount each week. For example, if your monthly payment is $400, your weekly payment is $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 can pay slightly more without even realizing it.
As you’ll see in the table below, paying weekly helps you put $400 more toward your debt over a year.
Payments | Monthly | Weekly |
---|---|---|
Monthly debt | $400 | $100 |
Total yearly payments | $4,800 | $5,200 |
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.
If you feel like you’re drowning in debt, 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.
You’ve cleared your debt, or you’re in the process of doing so. That’s great news. Going forward, build the financial habits to keep you out of debt.
When you’re in college, it’s easy for credit card debt to pile up. You might not have the experience or income to get through debt-free.
But by getting clear on your debt and forming a plan to attack it — including leveraging the right student cards — you can pull it off. As you do, you’ll build positive financial habits that’ll benefit you for years.
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