Plastic instead of paper: fast track to early debt

By Mallory Terrence
November 8, 2007

Megan Pellegrino

Credit cards offer college students the ability to purchase items without having money available. Although credit cards can be convenient many young adults do not realize the effect credit card debt can have on their entire life.

“Credit mistakes made early in life may follow a card holder for many years, through their credit reports, and have an adverse effect on a cardholder’s ability to obtain auto loans, mortgages or other forms of consumer credit,” Stephen Lightcap Vice President for finance and administration, said.

A survey conducted by Citigroup found that 52 percent of college students believe incorrectly that their spending habits while in school will not impact their credit report in the future. Over 37 percent think opening new, unnecessary credit cards will not lower their credit scores.

The college audience is a direct target for the credit card industry, with the conscious effort to create long-term customers. The marketing strategies of many banks lure in young people with promotions and perks of opening a credit card, leaving the fine print of the contract unclear.

Citibank has a credit card designed specifically for college students. The card offers rewards for general and specific purchases, for payments made on time and for good grades.

The program has zero percent introductory rates for all transactions, but in the terms and conditions you will see that the rate jumps to over 15 percent after the first six months.

The cash advance percentage rate starts at zero percent, but goes to 22.74 percent after the first six months. In contrast, Consumer Reports magazine lists the best credit card rates in the nine-to-12-percent rate.

College seniors are graduating with an average of $4,000 in credit card debt, according to The Student Public Interest Research Groups.

The PIRGs is an organization that has started a campaign that helps raise awareness among college students of the hidden dangers in using credit cards.

Cabrini College and most colleges and universities around the nation, have a direct affiliation with a local bank. Affiliations can range from on-site ATMs, to discounts and rewards for students.

Cabrini students are offered a free checking account through the college’s affiliation, Commerce Bank. These students are able to use the Commerce ATM machine located next to Jazzman’s fee-free, while other card holders must pay a two dollar ser charge.

Cabrini also allows other banks to come on campus and market their services.

The PIRGs are trying to stop on-campus marketing of credit cards towards students and prevent the credit card industry from profiting from hidden penalties.

A bill was introduced to Congress in early August of this year, to prevent credit card issuers from taking unfair advantage of college students and their parents.

If the proposed bill is passed, The Student Credit Card Protection Act of 2007 would require co-signers of student credit cards, limit credit amounts, and prohibit multiple credit cards to students.

Charging items to your credit card is only a temporary fix. To avoid interest payments, the balance on a credit card has to be paid every month and on time. ?

Missed payments can result in harming credit history and rising interest rates. Many college students fall victim to credit card debt because of unpaid balances.

Mallory Terrence

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