Taking a Bite Out of Debt

Plenty of temptation abounds on college campuses, especially for incoming freshmen. It is an epidemic which can inflict much trouble upon students, and it hampers the prospects for a life of leisure after graduation. “What is this insipid threat?” you are probably wondering. It is actually debt in the form of credit card bills and student loans.

Many banks offer loans to students needing money for tuition or a vehicle, which many former students work for years to finance. They and other financial institutions also advertise high-interest credit card deals to students, sometimes connected to a “free” prize. These offers have increasingly become offered over the phone and email after restrictions have gradually been enacted limiting on-campus solicitation, including stringent 2001 restrictions in California. Oftentimes, students become overwhelmed by credit card offers and feel obligated to purchase one. While it doesn’t hurt to hold one credit or debit account, college students often neglect to consider their ability to pay for credit purchases in the future. A recent study conducted by student loan agency Nellie Mae determined that the average debt owed by individual college students was $2700. More strikingly, approximately ten percent of students owed credit card fees in excess of $7000. This survey also indicated that the majority of college students hold more than one credit card, a side effect of generous-sounding lures from credit card companies. Evidence indicates that some colleges may in fact sell their students’ contact information to such companies.

For purchase-happy college students, a more beneficial alternative to a credit card is a checking and debit card account. This is because they carry a preset spending balance which cannot be exceeded without incurring a financial penalty, typically a fine of $30 to $50 per overdraw. If you find that a credit card is necessary, buy into an account with a relatively low credit limit and restrict yourself to one card. Actually, having one credit card may be beneficial because using one responsibly establishes good credit, which can help after graduation in securing loans and purchasing a home and vehicle. However, one must realize that credit cards do not provide “free” money to be spent haphazardly on unnecessary items and that such irresponsibility can really come back to haunt you later in life.