For some, college marks the beginning of financial independence. Unfortunately, this all too often takes a turnaround and causes many students to become financially imprisoned. I’m here to share with you my struggle to eliminate my own credit card debt. Now that I’ve learned the hard way how to manage my credit, I hope to keep someone from finding themselves in the same predicament as myself.
When I first started college, I reveled in my newfound independence. On one of my first shopping trips in college, I stepped into an Old Navy and took advantage of all the sales I could find. A saleswoman asked me if I would be interested in saving ten percent on my purchases by signing up for an Old Navy account. Seeing as I had $120 worth of clothes in my shopping bag, I opted for the grand total of $12 savings contingent upon selling my soul to the credit card company. With the fine print being too bothersome for me, I signed on the dotted line, thereby beginning a downward spiral that haunts me to this day.
Five years later, I’m still paying off my credit card debt. On one card, I pay $80 a month, with $50 going toward the incredibly high finance charge. That means that 63 percent of what I pay each month doesn’t even go toward eliminating this festering wound that is my debt; rather, it just lines the credit card company’s pockets.
If I could go back in time, I would gladly take back a majority of my credit card transactions just to be able to live comfortably today. Over 2/3 of one paycheck each month goes to three different credit cards. In retrospect, I’m not quite sure what I bought with all of that borrowed money – I’m sure it was mainly frivolous things like dinner for all my friends or clothing items that I only wore once.
Credit card companies know and prey on this vicious cycle that financially cripples so many college students today. This shouldn’t, however, discourage you from opening any credit accounts in your name when you become financially independent. In fact, establishing credit history early on will help you in the future when you start making important purchases, like your first car and home.
The key to successfully managing your credit is to do your research before you agree to any credit company’s terms. Most importantly, consider interest rates as well as your ability to pay off the balance. One common recommendation is that if you can’t pay off a credit card’s entire balance within two months, the purchase isn’t worth it. There are countless stories like mine out there, so before you open a line of credit, do your research and read the fine print; you’ll be glad you took the time to do so.