Reason #15,607 to avoid credit cards

The consequences for college students of overspending and abusing credit cards can include dropping out of school because they can’t handle their debt. Avoiding credit card debt in college is something that you should be thinking about and preparing for while you are in high school. If you know the dangers of having consumer credit and you arrive on your college campus with a sound financial plan, you will be able to resist the many temptations that might otherwise push you into using credit cards irresponsibly and building up credit card debt that you will regret later.

When you get to college and start your new life away from the comfort zone that you developed in high school, you will make all kinds of adjustments. In addition to your challenging courses, you will want to “fit in,” make new friends and develop a social life. While all of this is happening, you will not even believe how many times you will be solicited to open up more and more credit card accounts. These solicitations will often come from your fellow students. You will be offered things that will tempt you, such as T-shirts, coffee mugs, book bags with your college logo, valet service to help you move all your stuff on the day you arrive on campus, meal plan credits and a host of other goodies.

In some cases, you will be told by those soliciting you that it is “cool” to have and use a number of credit cards, or that they will make you feel important and powerful because now you can buy or do whatever you want.

In many cases, you will be told that even if you don’t really want the credit card, sign up for it anyway, get the free gift or service, and don’t activate the card. This way you can get all of the free“stuff” without suffering any consequences. Sounds easy, right?

Maybe this will change your mind: At a recent Credit Abuse Resistance Education (CARE) Program presentation, a young high school teacher who had just purchased his first house told the students that when he went to complete the purchase on the last day of his mortgage commitment, the mortgage company told him that it would not make the loan until he closed out all of the many credit card accounts he had opened when he was in college. He had never used or even activated the cards. He had to pay a $1,000 mortgage extension fee and spend hours closing the accounts that he no longer had records for.

This teacher told the students that he wished he had said no to all of those solicitations when he was in college. You see, you are less creditworthy when you have a lot of available credit—even if you don’t use it. Lenders know that nothing can stop you from going out the next day and maxing out those cards.

At another CARE Program presentation, a teacher told the story of his experience at a college bookstore. Outside the bookstore were two tables, one manned by a young woman, the other by a young man, who in the teacher’s words were both “drop-dead gorgeous.” The young woman was only soliciting the male students, and the young man was only soliciting the female students to open up new credit card accounts. Their approach was that if you opened up the account right then, you would be given a temporary card to use immediately for books and supplies.

The teacher remarked that many students ended up charging their books and supplies, then used the cash that they had in their pockets or checkbooks to go partying or buy other things. When the bill came at the end of the month and the money that they had for their books and supplies was spent, those students would have no choice but to start to make only the minimum payments on the account, pay interest at high rates and ultimately pay much more for those books and supplies than they were supposed to cost.

At college, no one is going to be there to help you resist these solicitations. And the people soliciting you are good at what they do.

You have to take written and performance tests to get your driver’s license. Isn’t it interesting that no one has to prove their financial knowledge, responsibility or good judgment to be able to get and use credit cards once they turn 18? Could it be because the credit card companies make big money on the interest that students end up paying when they don’t understand the rules?

Too many people use credit cards to buy and do things that they can’t afford. Because they don’t pay their balances in full every month, those individuals pay significantly more for everything because of the interest they must also pay. Unfortunately, many of those people simply don’t realize just how much more they are really paying.

Credit cards are not new money. They are just a different way to spend the money you already have. The truth is that you can buy or do everything that you can afford without a credit card. You can use cash, a checkbook or a debit card to pay.

If you decide to use a credit card for convenience, you should have just one, and be careful never to use it to buy or do anything that you can’t afford to pay for at the end of the month. It’s easy to go into debt with credit cards so that you can get or do the stuff that you want. Unfortunately, it’s hard to stop once you have started. As one financial planner recently observed, it’s like going on a financial diet. And we all know how well people do on diets.

What’s important for you to remember is that you can enjoy yourself and make it through college without credit cards and credit card debt. It can be done.

Unfortunately, despite what you are always being told in advertisements, none of us can have or do everything we want. What we can do is make good choices that allow us to live within our means. That way, we can have everything we need and most of what we want. 

U.S. Bankruptcy Court Judge John C. Ninfo is founder of the Credit Abuse Resistance Education (CARE) Program.

UNTIL THE NEXT ISSUE, PLEASE:
Visit the CARE Program Web site at www.careprogram.us, where you can check out “Things I Learned the Hard Way: Paying for Consumer Credit,” a film created by students at Nazareth College of Rochester.

Talk to your parents and teachers about credit cards so that you can decide before you go to college whether you should have one.

Start to discuss and plan for how you will use a credit card responsibly if you decide to use one in college for convenience.

Speak with your friends and family members who are in college or have recently graduated to develop a realistic college budget that won’t require you to resort to credit card debt. Ask them what they or their friends regretted spending money on in college and what they would do differently. Ask them what things you need to include in your college budget.

Article provided by