College
students targets for credit-card companies
By
Lisa Narciso
Daily Utah Chronicle
SALT LAKE CITY (U-Wire)—With all the new financial responsibilities incoming
freshmen have to worry about, they are encouraged to learn financial responsibility
early, especially when it comes to credit cards.
About half of college students with major credit cards in their name obtained
them prior to their freshman year of college, according to a 2002 Wall Street
Journal article.
Scott Candelaria, a member loan specialist at the University of Utah Credit
Union, said he sees many young college students acquiring credit cards because
of the inflow of credit card offers.
“With credit cards, what they need to know and remind themselves of at
all times is that that’s borrowed money they have to pay back,” said
Calvin Boardman, a professor in the finance department at the University of Utah. “And
that’s what gets them into a little bit of trouble.”
According to the Wall Street Journal’s article, students are three times
as likely to be at least 90 days delinquent on their credit card payments as
older adults.
College students are also more likely to pay late fees and over-the-limit credit-card
fees.
This, Boardman said, is where credit cards can get expensive, especially because
interest rates are higher for individuals who, like most college students,
do not have much credit.
Boardman also said opening one credit card leaves the option of getting more
credit cards, and as a result students may acquire more debt.
Even if students do pay off their multiple credit cards every month, from the
creditor’s perspective they still have debt because the credit is considered
open to take.
Although students should be aware of the risks of credit cards, they should
also be informed of the benefits.
Boardman said with all the options students have to pay for things, credit
cards may be more convenient than cash or checks.
Darren Lum, a finance and business management graduate, said he has been in
credit-card debt before when he made some big purchases, but he paid his balance
off before it reoccurred the next month.
“I wouldn’t get a credit card until you really needed it,” Lum
said. “[Students] need to really figure out what a luxury item is and what’s
a necessity.”
Because so many major decisions, like buying a car or house, are based on credit,
Candelaria said the main benefit of having a credit card is building good credit
by responsibly handling your credit card.
Incoming freshmen are also advised by both Boardman and Candelaria to try to
have some financial savvy.
“[Students’] entire lives will be impacted by their ability to be
financially responsible,” Boardman said.
Candelaria said budgeting money wisely is important for college students.
“Think long-range; don’t get in over your head trying to have fun
now.”
Lum said he feels fortunate to be able to afford more luxury items than most
college students, but he still budgets out what he needs to buy versus what
is an extra cost.
“Don’t go buy Pizza Hut if you can buy Tony’s Pizza. Eat Ramen
noodles, and you don’t have to go eat out,” Lum said.
If a student has a significant amount
of extra financial resources, opening
a savings account is a good way to invest money, Boardman said.
Boardman also said taking a finance course that covers subjects like borrowing
and investing would be helpful as well.
“In this day and age, it would be a good requirement for any freshman to
have to take that class to learn about credit, to learn about savings, budgeting
and insurance,” Candelaria said. “There is so much out there that
can get really overwhelming really quickly.”
Students can also get more information about credit cards at www.studentcredit.com,
which offers information that can help students select the right credit card
and learn good credit-management skills.
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