College students are in the midst of a crisis, and they may not even be aware of it – it’s credit card debt. The Washington Post reported in an April 18 article that 13 percent of college students owe between $3,000 and $7,000 on their credit cards.
In an analysis by student loan provider Nellie Mae, 32 percent of students who apply for educational loans carry at least four cards with an average balance of $2,700. A student with such a balance can expect to pay about $7,000 in interest if he or she pays the minimum monthly payment (2 percent) in a span of about 430 months.
According to a survey conducted by Card Line for Ohio University, one in three students possess at least two credit cards. One-fifth of all college students carry a debt of at least $10,000. At least 9.8 percent of them cannot even make minimum payments, while 70 percent of them have made only minimum payments in the past three months. Thanks to this situation, more than 300 colleges and universities already have banned credit card solicitors from their campuses, and an additional 140 are expected to do so by the end of the year.
Key Marketing Systems Inc., a Pompano Beach, Fla.-based credit counseling company, revealed that every three seconds one American is falling back on his credit card payments. As if all this were not alarming enough, a study conducted by SMR Research Corp., a business research firm that studies consumer financial services, reveals that one of the major causes of bankruptcy is credit card debt.
Nationwide, one in 96 families file for bankruptcy every year.
Credit cards bills are not something new to Glendale Community College students.
“I think credit card companies believe we college students are probably ready to be on our own boss and handle [credit cards], but sometimes we can’t,” said GCC student Leslie Hernandez. “Some students don’t know what they’re actually getting themselves into.”
Vivian Lindo, a liberal studies major at GCC with two credit cards, said she feels let down. Even though she limits her spending on the credit cards and makes it a point to pay as much as she can every month, she still has to pay interest on the remaining balances. She has this advice for all new card aspirants: “Don’t sign up for a credit card without reading the fine print and asking someone to decipher it for you.”
Kevin Davidson a psychology major, said he has 12 credit cards and makes prompt payments on all of them, with a little help from his mom.
“I still have a $3,000 debt, in spite of mom and me both pitching in to pay it promptly,” Davidson said. “If not for mom, I would have been in a greater debt hole. I don’t seem to get out of it, because of the compounding of interest. But then I can’t stop spending because I know I have access to it.” Davidson is only 20 years old.
These examples summarize the problem that most students are facing today. Their experience with and knowledge of the credit industry are limited. Maybe they would be able to see through the haze if they stopped to ask themselves why someone else is willing to pay for their expenses.