The plastic temptress

By Kelly McKee
February 17, 2005

Ryan Norris

America’s college students control more money than the national debt of some small countries. Together they spend more than $19 billion dollars a year. No wonder they are the perfect prey for credit card companies who hope to reel them in with incentives of a cool free t-shirt or stuffed animal.

And reel them in they do. Eighty-three percent of students have a credit card, nearly one third of these students owning four or more. This leads to the average undergraduate being $2,200 in credit card debt, according to Nellie Mae, the nation’s largest maker of student loans. That figure jumps to $5,800 for graduate students.

Companies such as MBNA and Citibank entice students with claims of low interest rates and minimum payments. This may seem like a wonderful offer alongside the free clutter but somewhere in that small print the students fail to notice that after the six-month introductory period, Citibank raises the interest rate on its student MasterCard to 14.99 percent. A single missed payment to Citibank nearly doubles the interest rate to 28.99 percent. So the $100 outfit you bought may end up costing you an arm and a leg more, especially if a study session, a.k.a. partying session, leads to a missed payment.

“Once you have the cards in your wallet, the temptation to use them is great,” Peter Bielagus, a Boston financial adviser and author of ‘Getting Loaded: A Complete Personal Finance Guide for Students and Young Professionals,’ said. However, managed responsibly credit cards can be a great way to handle your money. You can purchase online and have security in plastic rather than carry cash. In addition, having a credit card as a student can lay the foundations for your credit score, which is essential when it comes to seeking larger credit, for example a car loan or a mortgage.

On the other hand, for those students who fear the plastic temptress, according to the student financial magazine “Young Money,” having a credit card is not the only way to establish credit. Every time a student living off campus in a non-student housing residence makes a payment for a utility bill, the student is helping his or her credit score. Dave Capece, junior and graphic design and studio art major, upholds this sentiment. “I would never use a credit card, at least not right now,” he said. “I establish credit through other things right now, like my phone bill.”

Christopher Sabatino, junior and history major, represents the attitude of a lot of the campus here. “I don’t have one (a credit card); I guess that’s a good thing for me because if I did have one I would probably be in a lot of debt,” he said.

Gabrielle Hazlett, Cabrini alumna, knows all too well the dangers of credit cards. “As a student I used my card to buy a lot, even my car, leaving me with big bills,” she said. “I try to be smart though by bouncing the balance around from different cards so the interest remains low.”

Credit cards can be plastic fantastic but beware, a payment on time saves a payment times nine.

Posted to the web by Ryan Norris

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Kelly McKee

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