How to keep the credit blessing from becoming a credit curse.

photo illustration by Lindsey Gooding

photo illustration by Lindsey Gooding

In today’s society, we all want that special something that we don’t believe we can afford. Money seems to be always going toward things we don’t necessarily want to buy, but we need them to get through life.

But what if I told you that I would give you $1,000 to spend and you don’t need to pay me back until you get the money a year from now? Who wouldn’t take this offer?

College students all over the nation encounter these situations more and more every year. Many of them have thousands of dollars out in loans to pay for their education. In addition to school loans, many students have to take on side jobs just to pay for books or rent. This leaves no spending money for fun.

There’s no other alternative but for students to get a credit card. This isn’t just any credit card. This card is a dream come true to many students. Remember, with a major company already loaning students thousands of dollars, this gives the impression to creditors that this person is trustworthy. Therefore, they issue a credit card to an applicant with zero-percent interest for one year, along with a large credit limit. After all, this student is a trustworthy person, as shown by their college loans. This gives the college student the impression that they can spend the money on their card and know that they have more than enough time to pay it off.

This is where the problem lies. When the student has the credit card maxed out with all of their necessities, they are back where they started. Lucky for them, a few more creditors have sent them applications for similar cards. The debt of the college student begins here.

According to a study by Nellie Mae (a college student loan corporation) in 2001, 83 percent of undergraduate students have at least one credit card with an average balance of $2,327. This is not including their college loans. According to Nellie Mae, this amount may quickly soar to $8,000 due to the high interest rates that accrue after the promotional interest rate expires. This is when reality starts to hit the student. Many can’t tell their parents because they don’t have the extra money to get them out of the hole they are in. Many don’t have time to pick up a second job. This leaves the student in a terrible situation. The student only works about 20 hours a week at $7-$8 an hour which is not nearly enough to pay off their debt.

According to Dr. Robert D. Manning, author of “Credit Card Nation,” in the late 1980s the credit limit for a college student was $300-$500 and required a co-signer upon approval. This changed in 1991 during the economic recession. Creditors realized they could make more money by having promotional cards for students. This past year, credit companies spent millions of dollars to have the rights for advertising at the 250 most populated colleges in the nation.

Having a high balance of credit is not good for a student who has the temptation to buy many items and not be able to pay them off at the end of the month. According to Nellie Mae, students sometimes drop out completely just to pay off their credit cards. If the student does stay in school, the amount of stress that is put upon them will affect their schooling in a negative way. With their credit ratings in ruins, many fall into depression. Some even turn to suicide.

Suicide is the second leading cause of college deaths in America, behind car accidents. Males fall under a higher ratio of successful suicides than women do. That is partly because more males apply and are approved for credit cards than women. Spending the money is the card holder’s responsibility. Therefore, the responsibility for the suicide cannot be placed on the credit card companies.

Dr. Manning states that the stress upon a student with credit debt is too much.

This stress then turns into depression, which has been a major factor in the death of many college students. Suicide is not the answer. Strength and the will to not spend money is.

There are many ways out of debt. The first is to get a job and slowly make the payments each month on the card. Do not pay the minimum payment each bill. Try to pay at least $40 more every payment. When you get a card that you know you cannot afford to pay off each month, do not cancel the card. Instead, request a lower credit limit from your creditor. This will assure you that even if you max out your card, you will have enough money to pay the total amount each month.

Many students believe that they must have a card to achieve a good credit rating. There are many other ways to get that tier-one credit rating. Many students can start by paying off their college loans. This will give them a steady increase each month as they buy down their loans.

To avoid going into debt, do not apply for a credit card if you know that your total funds will not cover the total balance on the card. Another way to control money-spending habits is to have a prepaid card. This will give you the estimated amount of money per month without messing with nasty interest rates. What college students need to understand is that there is plenty of time to establish a good line of credit.

College students need to also understand that there are people trained to help them if they are in trouble. Suicide is never the answer. It will not only cause sadness and disappointment to your relatives, but the balances on your cards are turned over to your parent or guardian. That’s right – even if you are killed, your debt does not go away.

Credit cards can be a great tool in life. They can also be a very stressful tool. Credit cards are not meant to be used for everyday living expenses. They are there for large purchases that you can pay off over time.

Learn to use them wisely, don’t get in over your head, and you should be able to manage your cards and your money.