Credit card debt is the accumulation of unsecured consumer debt that is accessed through credit cards. Debt can accrue in this way via interest and penalties and there can be major credit score repercussions and interest rate increases for defaulting on the debt. Students who build up a credit card debt during college must deal with several repercussions with regard to their spending habits and payment neglect.
Potential Employment
According to author Sanyika Boyce, more than 70 percent of employers currently are looking into credit history when you are considered for employment (Reference 1). If a student has a long history of bad debt and a low credit score, this may lead to less consideration for a job. This can include jobs that a student applies for during school and for jobs down the line years after school. This is part of the consistent theme that credit card debt can have impact years after it is obtained.
Health
Research compiled by William Francis Galvin, Secretary of Massachusetts shows that student credit card debt can lead to various health problems associated with stress and mood (Reference 2). Debt issues may lead to depression, which can negatively affect information retention, academic performance, grade point average and study habits. Debt stress can lead to more chronic conditions later in life like insomnia, explosive emotions and heart attacks. Students who have higher credit card debt may be more likely to drink more, smoke more and commit suicide.
Interest, Penalties and Bankruptcy
According to the Adventures in Education Group, a college freshman who has a credit card tends to double the amount on the card by the time he has reached his senior year (Reference 3). Interest rates that increase astronomically after the first year and the missing of payments can lead to a large increase in the total debt amount over time. Bankruptcy filings are trending younger and younger, according to Secretary Galvin's site, which shows a 50 percent increase for bankruptcy filings under the age of 25 in the 1990s (Reference 2).
Lifestyle
Credit card debt mixed with the debt of student loans has caused graduating students to have to continue to live a student lifestyle. This means that students are less able to purchase permanent furniture and participate in social activities like networking groups and attending high-class restaurants and bars. A student who has a large amount of debt may have to spend several years living with less after graduation due to overwhelming interest rates and monthly payments. Students who have high debt may even find that they are unable to do some of the things they did for fun in college (because they were charging those activities on their credit cards) due to debt payments.
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