Posted by: Stefanie Marty
Moises Mari, a 24-year-old senior at Rutgers University, got his first credit card at 16 by lying about his age on the application. “None of my friends had one, and I wanted to be the first,” he says. “I was surprised how easy it was to get through the system. I was issued one within a few days.”
The era of “No Student Left Behind: Credit Card Edition” will come to an end early next year, thanks to the new credit card law. (Starting in February, the law restricts students under 21 from signing up for their own cards.) But, in the meantime, college kids now arriving on campus may see issuers making one last-ditch plastic pitch through offers of free pizza, iPods, or T-shirts. “These are very large businesses, and they can’t sit back and do nothing or their businesses will shrink too much,” notes David Robertson of the Nilson Report, a credit card analyst. So a little friendly parental advice from you couldn’t be timelier.
College students are just as hooked on plastic as their parents. Some 84 percent of college students have credit cards — more than half have four or more — and the average balance is $3,173, according to a survey by student lender Sallie Mae. (That’s on top of the $19,999 median loan debt for undergrads.) Many students seem unable to rein in their card use. More than three-quarters carry a monthly balance, and 60 percent in the survey said they were surprised how high their balances had reached. They are, in short, a card issuer’s dream: young, plastic-addicted, and willing to carry a balance into eternity.
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Wow, I didn't even realize a law was enacted to restrict students from getting credit cards under 21 years of age. As I look into my wallet, I truly can't believe how many credit cards I was allowed to get with limits up to $1,000. I use my credit cards primarily for clothing stores to purchase clothes with a discount (i.e. you receive 20% off if purchased with Macy's credit card). But once you actually look at the interest rate applied to the credit card that allowed you that 20% off your purchase, stores make more money from individuals who pay the minimum monthly payment and accumulate hefty interest (paying more in the end). The way I balance having credit cards as a student, who will be in serious debt by the end of my senior yea, is to pay the entire balance as soon as its due that way I can build a credit score yet protect myself from credit card debt.
ReplyDeletePosted by Lisa Matthys