We are all aware of the many issue’s students are facing in regard to credit card debt. This continues to create emotional stress, and anxiety for students. While it is well known that a college diploma may increase the earning potential and employment opportunities, what many college graduates don’t know is that they are likely to graduate with more debt than the non-college graduates. There is a need to find a solution for students who can no longer deal with the burdens caused by credit card debt. Therefore, I propose to research and write a report on how to avoid credit card debt. My goal is to provide insights for understanding the consumers’ attitudes in regard to credit card usage and offer some recommendations.
In our world today, everyone seems to be preoccupied with money and material possessions. This seems like a broad assumption to make however the idea of wealth has led many Americans to debt. The total credit card debt continues to rise, surpassing the 1 trillion-dollar benchmark since 2017, according to a Federal Reserve survey from the previous year (Dickler 2018). Temptations such as credit card agents on campus giving out freebies and promotions on sign ups, and pre-approved application forms sent to students’ mailing addresses can lead students to acquire these very early on with little to no restrictions. Credit card marketers are considered to engage in predatory lending as they “depend” on students’ lack of knowledge on these credit cards to earn annual fees and interests. (Christie 2001)
In today’s society where everyone is connected via internet and cellphones, purchases can be done instantly with just typing on a keyboard or one simple click of a button. Goods can be paid with credit cards and delivery will follow upon payment. Like everyone else students are more likely to buy now and pay later than to save and afford purchases. The buy now-pay later syndrome which came together with the information age results to the dangers of credit card debt among students. (Irby 2018) Problems of debt may rise among students who justify owning a credit card “for emergency use only”.
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This can be a major contributor for high credit card debt because most students have a broad definition of what constitutes an emergency. Some of the situation’s students consider emergencies in purchasing with their credit cards are late night pizza deliveries or buying the newest designer sneakers. Parents should encourage children to save money while sending the message, “If you can’t afford it, don’t buy it.” (Hoyer 2001)
It will come down to two ways. One, lucky students with hard working and responsible parents or guardians may have their debts paid by them while receiving punishments such as lectures on credit cards and debts, or simply be grounded for a few weeks or months. However, the less fortunate may be forced to cut back on studying by being part time students in order for them to get a job or a second job to pay their debts. This may translate to less money to pay the rent, bills and even credit card debts.
Most students perceive that once they have graduated from college and got a job, money will keep flowing in their bank accounts and their financial troubles will go away. This is a misconception because students still they have cred card debts, and this degrades their credit. Students as young professionals cannot get loans from banks, cannot buy cars, houses or even rent apartments because most companies and agencies because of their poor credit standings. (Khalfani-Cox 2015)
A credit card is an extremely easy way for someone to spend beyond their means. A credit card should be seen as a tool that must be monitored and utilized in a responsible way. If one does not manage their credit card in a proper way it can lead to financial problems. It is imperative to keep in mind that a credit card is a form of borrowing. You buy now and pay later. It all depends on how much a person has been educated in regards with money management. Students must first consult and review credit card applications with their parents before getting a credit card.
They must also be financially aware of the pros and cons of credit cards by reading books, articles or online reviews on the matter. By taking these steps students increase their chance of getting a financially secure future with good credit status. (Pinto 2001) Credit Card companies should adjust the credit limit accordingly to the person’s monthly income to avoid excessive debts. They should have exams that are conducted for credit card applicants on their understanding of credit card rules, regulations and overall usage of the card. By doing these measure credit card debts may be minimize if not eradicated.
