09/24/14 James Winston
Most people are aware, due to the economy, of the danger of credit cards. Nevertheless, there still seems to be a problem with people getting caught up into problems with credit cards and falling prey to the pressures involved with dealing with credit. With the increasing number of students going to college, it becomes necessary to educate the young about the reality of credit card and the dangers of credit.
College students often report that they receive offers for credit cards and it is not uncommon for some to actually think it is special that they are being offered credit or feel tempted easily. In addition, people who are struggling with the changes in the economy can fall prey to credit card offers and feeling that they will eventually be able to pay them off. In addition, most of us have witnessed how credit card companies will offer free items or services for just signing up and that can be tempting too.
Studies have found that some college students have been forced to cut back on courses due to debt or spending more time having to pay off debt delaying the completion of their studies. In extreme cases, there have been situations where college students had committed suicide due to feeling so overwhelmed with debt and the shame that ensues.
The credit card industry is quick to point out that issuing students cards is due to the research that when people get there first credit card they are likely to stay loyal to that credit card. They also attempt to say that college students are at no greater risk than the general public for defaulting on their credit cards. The problem is that the credit card industry does not track who pays the bill and many times it is not the student but the parent or family.
Some credit card issuers do not quote an annual percentage rate until they know the credit history. And so a range of percent interest is quoted and is based on credit history which can come as a surprise to some. Students frequently opt to pay only the minimum payment stated. The payment of a $1,800 balance with an interest rate of 18 percent will take you 22 years to pay the balance if nothing is added to the balance of course. Current laws do require this information to be given with each bill. The concern that parents should have with a poor credit history is the college student could be prevented from renting an apartment, getting a job offer, or qualify for a car loan or mortgage and may be denied insurance coverage. This practice is occurring more often with job interviews where credit checks are conducted.
The warning signs of credit trouble include not knowing how much is owed, charging daily living expenses on a credit card, having no savings or money for emergencies, being able to pay only the minimum each month, using cash advances to pay bills, getting calls from creditors asking for payments, and avoiding creditors or bills. If these warning signs occur, people who know the credit card holder should intervene to and suggest help. Employee Assistance Programs are an excellent resource to obtain advice and referral to certified financial counselors who can help.