A significant number of college students report that they have accumulated credit card debt while attending school. According to a recent report from AIG and EVERFI, 36 percent of all college students have a credit card with a balance of over $1,000 on it. This is on top of the student loan debt they are carrying.
Many of these students are using credit cards to pay for groceries, books, or entertainment expenses. Of students surveyed, some say they choose to use their credit cards over debit cards for the benefits the cards include, such as travel miles. These students are following a nationwide trend when it comes to using credit cards to pay for everyday expenses. A recent survey showed that 23 percent of Americans use their credit cards for necessities, including rent, food, and utilities.
However, problems arise when these cardholders are not able to pay down the balance every month. The situations can get even worse if the cardholder falls behind on payments, pushing the accounts into delinquency. The Federal Reserve Bank of New York reported that more than eight percent of balances held by young cardholders between the age of 18 to 29 were seriously delinquent. Being seriously delinquent means that the accounts are at least 90 days overdue with no payment made.
The EVERFI and AIG survey found that 15 percent of college students took a hit on their credit scores because of being behind on their credit card payments. Missing a credit card payment will not only cause the card’s interest rate to skyrocket, but it will also seriously affect that person’s credit score. The higher the interest rate is, the harder it is for the person to pay off the card over time.
It can be a definite struggle for the student to handle both a credit card and student loan payment after graduation. Students should put together a plan to pay off the credit card debt as quickly as possible by setting a deadline and a goal on how quickly the person can handle paying off the card. The plan only works if the student does not continue spending on the card and makes more than the minimum monthly payment on the card.
As bankruptcy attorneys, we see credit card debt as one of the most common problems facing those with serious financial challenges. It is not surprising with the high interest rates, unreasonable fees, and never-ending minimum payments that do not even make a dent in your actual debt. We offer additional tips for eliminating credit card debt on our blog.
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If you have questions on this topic or are in financial crisis and considering filing for bankruptcy, contact an experienced Miami bankruptcy attorney who can advise you of all of your options. As an experienced CPA as well as a proven bankruptcy lawyer, Timothy Kingcade knows how to help clients take full advantage of the bankruptcy laws to protect their assets and get successful results. Since 1996 Kingcade Garcia McMaken has been helping people from all walks of life build a better tomorrow. Our attorneys’ help thousands of people every year take advantage of their rights under bankruptcy protection to restart, rebuild and recover. The day you hire our firm, we will contact your creditors to stop the harassment. You can also find useful consumer information on the Kingcade Garcia McMaken website at www.miamibankruptcy.com.