College Grads – What They Need to Know About Credit

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Recent statistics show that 22 percent of the American population has obtained at least a Bachelor’s degree. This number sits at an all-time high for the country, and it’s hard to argue the economic benefits of obtaining a degree.

Unfortunately, it seems that credit companies seem to know right when a person is graduating and starting out on the journey of their life. These companies swoop in and make offers for credit cards and car loans, and sadly, many graduates end up drowning in debt when they cannot repay these loans. Fortunately, there are a few surefire ways to avoid this.

Research and understand Interest Rates

People need to understand that using credit to buy a car, home, big-screen television or anything else under the sun isn’t really “buy now, pay later.” In actuality, it’s “get now; pay more than what it’s worth later.” A television that costs $100, for instance, and has an interest rate of 25 percent will end up costing a person at least $125, and that’s if they pay off their entire credit card bill after the first statement is due.

Sadly, many choose to simply pay the minimum amount due, and this is usually just the interest. This often leaves a person paying for something for years only to realize that they’ve barely made a dent in the amount due.

Emergencies Only. Seriously

Most college students say “I’ll just use it for emergencies.” Parents with college-bound children tell them the same thing. For some reason, however, things like fuzzy pink dice, DVD players and new car speakers somehow become “emergency” items. People must realize that not bringing enough cash for a luxury item does not constitute an emergency.

In fact, many college students don’t even get credit cards for emergencies anymore. Some are now opting to simply save up and put $1,000 in savings. This sum of cash can handle just about any emergency, including: emergency room visits, car repairs and traffic tickets. Having this lump sum of money can go a long way in handling an emergency without going into debt.

Don’t Combine Credit with Other Collegiate Activities

If there’s one thing that should never be combined with a credit card, it’s alcohol. Alcohol, by its very nature, lowers a person’s inhibitions. Astoundingly, even a bright young college student may think it’s an amazing idea to buy the entire bar a round of shots on their credit card after a few too many drinks. Sure, it may seem fun at the time, but just wait until that hangover is over and the bill comes in.

There’s a very simple way to avoid this issue: leave the card at home when going out for fun. A dinner date, drinks with friends and house parties are no place for credit cards. There’s literally nothing involved in any of these activities that should require a credit card, so leaving it at home is simply good thinking.

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If it’s Already Too Late

Sadly, many people never even consider maintaining a strong credit standing until after they’ve already ruined theirs. A person can’t really say that a loan company hopes for its customers to fail, but it sure can seem like it from time to time. When no proactive measures are taken, or when they simply fail, a person can still recover by using certain credit repair services.

A person who chooses to try to repair their credit on their own has a difficult road ahead of them, and sadly, they’ve got battles on numerous fronts (ie. building credit, paying off balances). Professional companies will handle these things for an individual, and by the time it’s over with, a person’s credit will likely be in far better shape. It’s just important to keep it that way.

Going into debt is certainly no picnic. Credit companies know that, even though a person may be graduating with a degree, young adults are sometimes still naive or irresponsible when it comes to credit. The most important way an individual can handle this type of debt is to keep their spending under control in the first place. While it’s true that there are ways to get out from under the suffocating cloud of debt, it’s best to try to avoid succumbing to it in the first place.

Author Catherine Stephens is also a small business offers this advice to help keep our college students’ heads “above water.” If you’re reaching out for help with your unmanageable debt, be sure you find a reputable agency with no ties to the banks and credit cards which extended the credit. DebtPayPro is one of the largest providers of debt settlement CRM software systems within the finance industry, and offers strategic tools to debt negotiators so they can properly track your credit history and resolutions.


  1. At least they are so much more informed about credit and the impact it has long term then I was even 10 years ago!

  2. It turns my stomach to think how many college graduates know nothing about their credit.

  3. I believe that if the interest rate is 25%, that is based on a yearly basis (APR). If a television cost $100 and a person paid it off before the second statement, the total cost would not be $125. It would be lower. People need to read all documents before signing on the dotted line.

  4. Great tips that every college student should hear.

  5. One thing I hate about college is my student loan debt. I honestly wish I could just win enough in the lottery just to pay it off!

  6. It is amazing how much debt they graduate with and it is going to take years to pay it back. It is important to know the interest rate too and sometimes they can be changed to a lower rate loan. I hope I can help my kids when the time comes with college tuition.

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