Are Students Getting In Over Their Head With Student Credit Card Debt?
It’s no big surprise that major credit card companies are aiming their marketing campaigns towards our countries up and coming generation. To credit card companies, no consumer is more profitable than today’s college students. Students are big business to them, and for good reasons. Why? Simple, teens like to spend money they don’t have! Were you poor when you left the house and took your first shot at the big University? Yeah, so was I. In fact the majority of today’s college students live off of loans and a minimum wage job, leaving them very little to spend on merchandise. This is where the credit card companies make their killing. Instead of saving up for that cute pink shirt on the clearance rack, or that shiny new watch, students can charge it to the new “low” APR student card they just received in the mail. In fact, by opening up credit card booths Nationwide, credit card companies are making it easier than ever for students to get their feet wet. So in answer to the topic question: yes, students are most definitely getting in over their head when it comes to credit and debt management. If your part of the younger generation you may recall getting your very first shiny gold/platinum card in the mail. Do you remember skipping all the fine print mumbo jumbo? Well, most students today are in the same boat. The only thing we cared about is that little line at the bottom that tells us how much we can spend: our line of credit. The fact is, Most “Student” credit cards come with a ridiculously high APR and crippling late fee charges, which in most cases, cause the APR to soar even higher! This may seem a little redundant and obvious to you and I, but to students the phrases “APR”, “late fees” and “interest rates” aren’t an established part of their vocabulary yet. This is where things get sticky. The statistics don’t lie, and research has it that nearly 11 percent of people who seek credit counseling are under the age of 24. According to Colorado Public Interest Research Group, 49 percent of Colorado's college students have more than one credit card, which is higher than the national average of 37%! The solution should be obvious. Students should be taught about credit and debt management. In fact, most students don’t even know that free nonprofit credit counseling agencies are at their disposal, nationwide. Counseling can help make budgets or stop students from sinking further in debt. They also re-teach young students the “value” of the dollar bill, a concept slowly diminishing in our day and age. It’s obvious credit card companies care very little about this. The more we don’t know, the more they make. Adam Boulton is currently enrolled as a full-time student and has seen first hand the damages student credit cards can cause. If you would like more info about the pros and cons of student credit cards please visit his website at StudentResourceCenter.com
Credit cards for tuition and books? There are better ways to manage student debt
The price of a college education has risen dramatically in the last ten years. Prices of tuition, room and board and books have increased much faster than the rate of inflation, and students and their parents have struggled to find ways to pay for these increases.
A recent study by the Smith College Women and Financial Independence Program found that nearly one quarter of college students are using their credit cards to pay for some of their college expenses. This is a poor choice, as we shall soon see.
Unlike a generation ago, most students today have at least one major credit card. The lending industry has aggressively targeted college students and made it very easy for them to obtain cards. The problem is that most people of college age have relatively little money management experience and tend to use the cards rather foolishly.
About ten percent of college students have balances on their credit cards of at least $5000, and much of this debt is attributable to using the cards for college expenses.
The main problem is the interest rate on credit cards, which tends to be much higher than other borrowing choices for tuition. The Federal Stafford student loan program offers rates for tuition in the neighborhood of 5%, and that's after an increase that recently went into effect. Five percent is a dramatic improvement over the 20% or so that one might pay using a credit card.
Other options are available. Some universities will allow payments; students should inquire to see if they can simply pay on installments. Even if interest is added, it undoubtedly will be a less expensive option than paying by credit card. There are student loan programs available for the parents of students at favorable rates that are only slightly higher than those for Federal student loans.
Students need to understand how to use credit cards responsibly. The best use for credit cards is for a purchase that can be afforded immediately, not a long term purchase. Buying textbooks with a credit card is OK as long as you can pay the bill when it comes at the end of the month. Putting a semester's tuition on the card, with no idea as to how or when it might be repaid, is a poor choice.
Students who develop bad spending habits early are more likely to have problem debt down the road, and may be headed towards early bankruptcy as their spending hurts their credit report.
Anyone who has questions about how to effectively pay for education expenses should contact his or her school's administration. They can point out which department or departments may be able to help assist with expenses in a way that won't drive students straight into a life of problem debt.
About the author:
Talbert Williams offers debt consolidation, debt reduction, credit card debt referrals and advice. For more information, articles, news, tools and valuable resources on debt solutions, visit this site: http://www.1debtfreedom.com
Items covered in this site:
A student loan debt consolidation loan allows you to combine your federal student loans into a
single loan with one monthly payment. The repayments of a student loan debt consolidation loan
can be significantly lower than the payment required under the standard 10-year repayment option.
For American students, the U.S. Government came up with a plan that can help a student manage
their student loan debt. The plan they came up with is called a Federal Direct Consolidation
Loan. It doesn't matter if you're a recent graduate student, well into your career already,
still at school, or in your grace period for repayment of a student loan. For any of those
student categories, a Federal debt consolidation loan may be applied for.
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