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news
Study
shows increase in credit card usage
By Heather Clarke
Summer Forty-Niner
The use of credit
cards among undergraduate students rose between 2000 to 2001
according to a study conducted by Nellie Mae and posted on
the College Credit Counseling website.
Credit Cards belong
to 78 percent of undergraduate students with an average debt
of $2,748, according to Nellie Mae’s 2000 study. Mae conducted
the study again in 2001 and found that the amount of undergraduates
with credit cards rose to 83 percent.
The 2000 study
also showed about 95 percent of graduate students have credit
cards with an average debt of $4,776.
Credit card companies
have been criticized for contributing to student debt because
they market on college campuses. Some of the heaviest criticism
came from a Robert Manning study published in 1999 by the
Consumer Federation of America in which he stated that the
aggressive marketing of credit cards on campuses poses a greater
threat than any other social pressure.
He also stated
that students gain debt easily due to financial naiveté,
which is reinforced by low minimum monthly payments along
with routine increases in credit.
Juan Banda, a 24-year-old
senior at Cal State Long Beach, said he got into debt his
freshman year.
“I learned the
hard way my first year of college,” Banda said. “It took me
a while to pay it off.”
Banda had not been
warned about credit card debt when he was younger and now
makes sure to only spend what he can afford, he said. He also
pays the full balance on the bill when he can.
Sandra Jackson,
a 19-year-old sophomore at CSULB, got her student visa card
last year from a pamphlet she got inside a classroom.
“The payment isn’t
bad,” Jackson said. “It’s a $15 minimum. I pay $45 to $50.”
College Credit
Corp. and Campus Dimension are the two companies which market
on CSULB’s campus during the school year, according to Roman
Gulon, general manager of the bookstore and chief executive
officer of the Forty-Niner Shops Inc.
The companies have
an agreement with CSULB and must follow the rules and regulations
of the campus, which include staying in their area and acting
in a respectful manner, Gulon said. The companies must also
provide students with information on the dangers of excessive
credit card usage.
However, three
different companies were removed from campus this past year
for not complying with the agreement, Gulon said.
Credit cards are
also easily made available to students through CSULB. Students
can get a student credit card through Associated Students
Inc. and alumni can get one through the Alumni Association.
A.S.I. has a contract with MBNA so both associations will
receive royalties to benefit the school, said Gay Arakawa,
director of the Alumni Association.
“The royalties
have been used to support things like the president scholars
program,” Arakawa said.
Arakawa said the
association realized people often get into debt on their credit
cards but knew people would apply for cards anyway. They saw
providing the alumni card as a service to the students that
would also benefit the university.
Arakawa described
MBNA as one of the better credit card companies.
“One thing with
this credit card company, they work with the individual if
they do get into debt,” Arakawa said. “In a lot of ways, I
think it behooves credit card companies to educate students
because they’ve gotten such a bad rap.”
It is important students make sure
they are aware of the annual fees, finance charges, late fees
and over-limit charges, according to the College Credit Counseling
website. The credit counseling service also points out it
is necessary to make sure students understand the terms of
a credit plan before accepting the card. College Credit Counseling
also advises students to steer away from impulse buying and
instead think about how long it would take them to save enough
cash to buy the item.
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