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No money? Why worry when you have plastic? By
Shauni Siddoway Buy now and pay never, when you have a credit card. It is the American way. Credit cards have become an increasingly large problem for college students. Students are able to obtain credit cards without income or credit history. In fact, college students can obtain credit cards easier than any other group of consumers. Credit card vendors are set up around campus throughout the school year. "I applied for my first credit card in front a fraternity house when I was only 18 years old. I didn't even have a job," said Utah State University student Jessica White. "Financial institutions have found college campuses to be fertile ground for offering kids cards on street corners and through the mail. Most college students have just turned 18, so they are legally able to sign a contract for a card without getting parental approval," writes Steve Rosen on the Kansas City Star's website. Credit cards seem to be a trend among college students. Many students apply for them simply for the fact that all their friends have them and seem to be spending endless amounts of money. "College students are awash in credit cards, and in credit card debt. Gone are the days when you had to have an income or a good history of paying your bills on time in order to get a credit card," writes Stephanie Brenowitz in an article on APBnews.com. "Now, students get preapproved cards in the mail or sign up for one on campus in exchange for a free Frisbee or Slurpee. But they can also get into a lot of trouble if they don*t know how to use credit cards carefully." Many times when students first receive a credit card they view it as simply free money. When the minimum payment may only be $20 a month the reality of having $1,000 of debt may not quickly sink in. "My biggest problem with credit cards (for young people) is that they don't understand how fast the penalties for late payments and interest can add up. If your kid makes just the minimum 2.5 percent monthly payment on a $1,000 outstanding balance with 18 percent interest, it would take seven years to repay and cost $730 in interest," writes Jayne A. Pearl in her book, Kids and Money. "I have been working the last four years to pay off a credit card I got my freshman year. I have only been able to make the minimum payments and I feel like I will never pay it off," said USU student Jennifer Viney. "I see the vendors on the street corners of campus, trying to exploit the weaknesses of college students. Not once has a vendor ever told me about the other side of the coin -- the high interest rates, paying it off every month, what it can do to your credit. And all you have to have is a heartbeat to get a credit card," said Scott Becker. Although there are significant reasons why some students need credit cards many students use them frivolously. "Too many students live off of credit cards with the belief that they are free money. They do not realize the consequences and the debt that they will later struggle to pay off," said USU student Shawn Wolfley. Credit cards are something that parents should address with their children before they move out and go to college. Some alternatives for parents to recommend include establishing a checking account, debit card or progressive credit. For more helpful alternatives to credit cards, see the article, College Students Get Credit Cards. "When young people deal in checks and cash, they learn more quickly how to manage money. There's a different psychology when you have to subtract a check in your checkbook register and see how much less you have than when you get a credit card receipt that you just put aside," said Don Silver in an article for the Associated Press. Credit cards are good to have if used properly. They can be a good resource in times of emergency. The most important part of having credit cards is to make responsible choices in both obtaining and using one. Some helpful hints include shopping around before deciding on the credit card that would work best for you. Also, it is helpful to pay your bills on time and in full every month. For more information on responsible credit card use, see responsible tips for credit card use.
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