Student contribution: Credit cards in college

My definition of a credit card: a tool that can be used for both the construction and destruction of your personal finances.

From the moment you turned eighteen, credit cards have probably been a looming temptation for you, with offers coming from your bank in emails and even on campus. Signing up takes a matter of minutes, but the mysterious fees and high interest rates can last a lifetime.

Ideally, you’re completely aware of the fees and how a credit card works when you sign up. But so many students struggle to make the best spending choices. The long-term impact of these obstacles can eventually lead to credit card debt.

I had a very personal experience with this my freshman year. I signed up for a credit card but didn't touch it for the first six months. Once my checking account started to dry up, rather than acknowledging my unhealthy spending habits, I started racking up credit card debt. After paying for what felt like endless Ubers, snacks, books and everything else I thought I needed, I  realized I had spent almost my entire available credit (not good!). This is when the panic finally set in.

Luckily, my fear led me to do some research and after a little trial and error, I created a system to pay back my debt. Once I found out how much I was spending on ride-sharing, I deleted the apps from my phone. I also noticed the difference in price between eating in and eating out, which motivated me to make better and more thoughtful choices for dinner. The last part of my self-imposed “treatment” was transferring some of my money to my savings account immediately after getting paid, rather than saving whatever was leftover later.

Here’s the full process I used to get myself out of credit card debt in six months:

Step 1: Diagnosing the problem

• Identify where the money is being spent. Is it on essentials or nonessentials (like my ride-sharing and restaurant meals)?

• Acknowledge how much debt there truly is, including the ever-accumulating interest.

Step 2: Start a solution

• Put a new perspective, strategy or budget to the test (take this iGrad course to find a budget that works for you).

• Have someone hold you accountable. A friend or a parent who knows your situation and can check in with you on your progress is helpful.

Step 3: Check up with yourself

• Find a way to measure your progress. You can’t tell if your process is working if you don’t see results.

• Once you’ve seen your progress, consider adjusting your plan to get even better results.

After all of this, you probably won’t ever want to use a credit card again. But while debt is rarely thought of as a good thing, using your credit card every once in a while can go a long way to establishing good credit. I am sure you have heard of a credit score and most people know that you should aim to have a “good” one, but do you really know why or how to do that?

I recommend taking this iGrad course on understanding how to use your credit card responsibly to get a better idea of how it all works. I truly believe that you can have and use a credit card responsibly as a student, but it’s important to do your homework before you start spending.

Post contributor: Aubrey Durham