Unwary Students Can Fall Into Credit Card Trap Running Up Huge Debt Leaves College Grads In A Financial Hole

In a magazine ad for a popular credit card, a young woman lounges at the beach with a cool beverage in one hand and a smile that says she hasn’t a care in the world.

The message: This could be you.

The reality: This could be you, for a price.

Purchasing vacations, meals out and expensive clothes couldn’t be easier for college students. Getting a credit card requires little more than filling out a form.

About 60 percent of the nation’s 5.1 million full-time undergraduate students at four-year universities have at least one major credit card in their names, according to Roper College Track, a research division of Roper Starch Worldwide.

But acquiring consumer debt during college can lead to trouble, because eventually everybody has to pay. And the longer college students wait, the more they end up owing in interest charges. Also, credit cards encourage the habit of spending money before earning it.

That’s a bad habit. And that’s why credit cards are a temptation most college students should pass up, said Sherri Goss, education director at Consumer Credit Counseling Service (CCCS) of Greater Atlanta.

“If you don’t have income, you shouldn’t have debt,” said Goss.

Credit cards make it too easy for students to make purchases they can’t afford, Goss said.

Jessine McGarity knows that well.

The 25-year-old accounting assistant graduated from Georgia State last spring with a degree in accounting and about $8,000 in consumer debt. She had used credit cards for everything from a stereo system to groceries.

“I’m paying now, and it’s no fun,” McGarity said. “You charge and charge, and before you know it you’re paying for the rest of your life.”

Today, McGarity lives within a budget. She pays the minimum balance plus 10 to 20 percent on all credit card bills. For new purchases, she pays cash whenever possible.

“Sometimes you have to learn by your own mistakes,” she said. “I’m disciplined now.”’

Even when common sense tells students that credit cards are a bum deal, temptation on college campuses is everywhere.

Credit card reps beckon to students from strategically placed booths, offering candy, water bottles and other gifts to those who sign up. Credit card companies flood students’ mailboxes with offers for preapproved cards. “No income necessary!” they proclaim.

Charging was a way of life for all McGarity’s college friends, she said, including 27-year-old Darryl Holloman. The recent graduate owes about $1,500 to a credit card company and several clothing stores.

“I’m planning to go to grad school, and I have to drag this bill along behind me,” Holloman said. “Every month I have to send five checks to pay for my credit cards. It adds up.”

It does add up, and fast.

The typical balance on a credit card is $1,700, according to Bankcard Holders of America, a consumer group. At 18 percent interest, a consumer who makes only the minimum payment of 2.8 percent will spend 14 years paying off the debt.

What’s worse, the consumer would have paid almost $2,000 in interest.

“Our feeling is not that students shouldn’t have credit cards,” said Ruth Susswein, executive director of Bankcard Holders of America. “But they need education so they can make wise choices.”