OPINION & EDITORIAL
Students quickly charging themselves into oblivion
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Also by Hannah Karns:
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- ASM not perfect, but still working (October 31, 2007)
- Election day voters left hanging by bill (October 17, 2007)
- Legislation to give immigrants rights they deserve (October 4, 2007)
- UW offers bogus two-for-one special (September 20, 2007)
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by Hannah Karns
Wednesday, December 12, 2007
After leaving home and encountering the big bad world of
rental agreements and security deposits, money has become an obsession on
campus. We all do it — search through every jean pocket, every jacket and every
purse to pool all of the change we possess to pay for the Chipotle we are
craving or that caffeine kick from Starbucks.
However, more and more students are resorting to another
means of paying for what they want and "need" now — credit cards. Recently, a
University of Arkansas study reported that around 70 percent of college
students have at least one credit card.
At the beginning of each school year, we see them — the
credit card companies. They sit on the corner of University Avenue and Park Street
offering T-shirts as rewards for signing up for the latest "student-friendly"
credit card. On those hot September days, they sit in front of enticing store
fronts like Cold Stone Creamery hoping the craving for ice cream will be enough
for a student to acquire another card.
From my observations, students sign up for the cards, forget
about them by the next "Thirsty Thursday," and only remember when they receive
the cards in the mail. And that is when the credit card companies really
ensnare the students. A balance of $500? A line of $1,000 credit? You can buy
what you want now and pay much later. What an excellent system.
If only that were the case. Students seem to forget about a
little thing called an interest rate. It would take a student more than 12
years to pay off a $1,000 bill making a minimum payment every month with an 18
percent interest rate.
Part of the problem is that there is no "Life 101" class
students can sign up for. Unless parents deemed it necessary to teach their
children fiscal responsibility or even how to balance a checkbook, this is not
common knowledge. I know that I cringe every time I see the credit card sharks
out and about on State Street, but many of my peers jump at the chance for free
Subway or Domino's.
According to the Public Interest Research Group's "Student
Credit Card Trap" study, students who sign up for credit cards at tables around
their campuses are much more likely to have higher unpaid balances than those
who received credit cards from a bank or other means.
It is kind of embarrassing how quickly students get swept up
into the credit card scene. After signing up with a bank here on campus, I
received a credit card with a line of credit. I hid it from myself, and I hope to find it in among my
possessions by the time I graduate. I did not trust myself with the purchasing
power of the card, and feel as though I have good reason for this
distrust.
According to Nellie Mae, the largest student loan
distributor in the nation, "the average student has $2,200 in credit card
debt." Since most student cards, at least initially, only carry maximum
balances of around $500, this means students are maxing out on multiple cards
and cannot pay their bills in full.
This statistic is embarassing. Blame it on the material culture
of America, if you must, but it is absolutely ridiculous and appalling that
students are accruing this kind of debt. Luxury items such as a new dress at
Urban Outfitters or pair of boots from Up Boutique are not worth ruining your
credit before you have your bachelor's degree.
According to Robert Manning, a sociologist at Georgetown
University who has been studying credit card debt, card abuse "now poses a
greater threat than alcohol or sexually transmitted diseases."
MasterCard poses more of a threat than gonorrhea? Who knew?
In order to solve a problem that has continued to escalate,
I have two proposals. Students need to be required to take a Money Management
or Consumer Science course before they can acquire a card. Or, to piggyback on
the idea of Stephen Brobeck, the executive director of the Consumer Federation,
a law should be passed requiring those under the age of 21 to have parental
permission or prove he or she has an income.
Yes, it seems dramatic, but this may just be what college students need.
Hannah Karns (hkarns@wisc.edu) is a sophomore majoring in political science and international studies.
Anonymous (December 12, 2007 @ 7:21am):
Students under 21 just need a lower credit limit. They should be able to build up their credit history in a responsible manner.
Anonymous (December 12, 2007 @ 7:46am):
"Recently, a University of Arkansas study reported that around 70 percent of college students have at least one credit card."
-EVERY college student should have A credit card by the time they graduate. It's important to start building a credit history and a good credit score BEFORE you need it. Car loans, Mortgages, even some apartment rental agreements depend on credit rating.
"Students need to be required to take a Money Management or Consumer Science course before they can acquire a card. Or, to piggyback on the idea of Stephen Brobeck, the executive director of the Consumer Federation, a law should be passed requiring those under the age of 21 to have parental permission or prove he or she has an income."
-Great, more gov't nannyism. How about students who get credit cards assume responsibility for them and how they use them? Even with parental permission there will still be students who will max out their credit cards.
Anonymous (December 12, 2007 @ 7:47am):
I want to know who these idiots are who don't know that credit card interest is exorbitant. I want to know who hasn't heard the "you DO have to pay back what you borrow" speech a million times.
Live within your means. Quit going to Starbucks and Chipotle, mac 'n cheese and ramen noodles served many well for years.
Anonymous (December 12, 2007 @ 8:39am):
Or you could just be responsible and pay off your bills. It's not that hard.
Anonymous (December 12, 2007 @ 9:35am):
Easy credit is like easy crack cocaine. Both are addictive and pushed by people with no ethics or conscience.
With the new bankruptcy law it's even more of a money maker, with greatly reduced risk to the credit pushers.
GOD DAMN THE PUSHER MAN!!!
Anonymous (December 12, 2007 @ 10:17am):
"God damn the pusher man" is right!
Like they say, plastic is the poor man's money. And no, paying off the credit balance every month is not always that easy when mommy and daddy don't pay for your life and you're a fulltime student who can only work part-time.
Anonymous (December 12, 2007 @ 12:09pm):
"Part of the problem is that there is no "Life 101" class students can sign up for. Unless parents deemed it necessary to teach their children fiscal responsibility or even how to balance a checkbook, this is not common knowledge."
It's not common knowledge? It's called COMMON SENSE! What we really need is to take the credit cards away from the coasties. We'll see what their life is like without daddy paying their $900 bill from Urban. Hahahahhahaha
Anonymous (December 12, 2007 @ 12:46pm):
"And no, paying off the credit balance every month is not always that easy when mommy and daddy don't pay for your life and you're a fulltime student who can only work part-time."
Dear Self-loathing "genius": A school loan interest is less than 10% and a credit card interest is greater than 20%.
TAKE OUT SCHOOL LOANS, QUIT USING CREDIT CARDS!!!
Leson over.
Anonymous (December 12, 2007 @ 12:58pm):
Yeah it's all "assume responsibility" and "just be responsible", but ONLY for the borrower.
The lender can be extremely irresponsible and loan money to anyone who can fog a mirror. The lender doesn't have to do any analysis of the possiblity that the borrower can repay - just charge enough interest and fees to everyone so that money is made. Too bad for the poor fool that borrows more than they can pay and ruins his life.
A fool and his money are soon parted - haven't you heard?
Anonymous (December 12, 2007 @ 2:22pm):
Like they say, plastic is the poor man's money. And no, paying off the credit balance every month is not always that easy when mommy and daddy don't pay for your life and you're a fulltime student who can only work part-time.
I love how everyone assumes that mommy and daddy pay for everything. I too am a full-time student who can only work part-time and I pay my own way. You live within your means and learn self-control. It IS easy to pay off your credit cards every month if you choose to make it that way. That means not spending 100 dollars at the bar every weekend or eating out 4 times a week.
Anonymous (December 12, 2007 @ 4:26pm):
"Annual income twenty pounds, annual expenditure nineteen ninety-six, result happiness. Annual income twenty pounds, annual expenditure twenty pounds ought and six, result misery."
~Charles Dickens
Anonymous (December 12, 2007 @ 4:28pm):
Credit buying is much like being drunk. The buzz happens immediately and gives you a lift.... The hangover comes the day after.
~Joyce Brothers
Anonymous (December 13, 2007 @ 7:55am):
Hey everyone... ever hear of interest free introductory rate credit cards? no interest on your card for a certain amount of time, usually a year+. charge it up and when the intro rate offer is almost up and if it's not paid off switch the balance to another card with a no interest intro period. pretty sweet deal. the beginning credit line is usually pretty weak but if you really want to go on a little trip and don't have the means or something these let you do it. especially when you're in college because damnit, if you're graduating from UW-Madison you'll be able to pay it off in no time!
Also, if you use a credit card like the day you turn 18 and gain a decent credit line (by paying it monthly) if you really need it a few years down the road the interest usually doesn't kill if you still make your payments on time.
I personally have a pretty heafty balance (5000+) having recently graduated but it's not killing me and the interest is super low.
MBNA Alumni card.... get one early!
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