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Consolidate Credit Cards: A Smart Option
The average college student has multiple credit cards and maintains balances on all of them. By the time, the student is ready to graduate, he or she may be looking at a sizable chunk of debt that could be difficult to pay off. That's why, in many cases, the idea to consolidate credit cards is a good one.
Paying small amounts on several credit cards will only extend how long a debt will last and will cost much more over time because of the added interest. When students are serious about digging themselves out of debt or are simply interested in streamlining their financial obligations, consolidating can be a great decision.
Unlike adults who can sometimes take out a loan to consolidate their outstanding credit card debt, students usually need to transfer their balances onto a single card. For the consolidation to be effective, however, that single card needs to be choosen wisely.
According to the article "Credit
Cards Turn into Campus Nightmares" at PBS.org there are a few
things to look for in the chosen credit card. For example, a low
fixed-rate card is preferred to one that has a zero introductory
APR, because few students will be able to pay off their entire balances
before the introductory rate is over. That could mean higher interest
rates than before.
It's also a good idea to choose a card with a better-than-average grace period. A card that offers a 25-day grace period, for example, is a good option.
Consolidate Credit Cards: Sometimes It's Too Late
Although, the choice to consolidate credit cards may be a good one in some cases. For others, it may be too late and different actions may need to be taken.
When credit card usage becomes necessary for survival, there's a serious problem. For example, when a student uses their credit card to buy groceries, purchase gasoline, or pay other bills he or she may need additional assistance. The same is true for students who get into the habit of paying credit card bills with other credit cards or using cash advances to cover basic expenses.
Instead of opting to consolidate credit cards, these students may
want to need to look into Consumer Credit Counseling Services, such
as those offered by organizations like Money
Management International. These services can work with students
and creditors to develop an effective repayment plan.
References and Links
To learn more about the facts of student credit cards read "Student
Credit" or to learn about consolidating other types of student
debt read "Student
Loan Consolidation Program."
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