Use and Abuse of Credit
The use of credit cards is much more dangerous than use of checks or cash. Paying with cash is very easy; for knowing how much money is available and how much can be spent makes it very hard to get into debt. When paying with a check the process is a bit trickier; the exact balance has to be kept on the account at all time. Knowing what this balance is and continuously replenishing it can be quite hard. Nevertheless, even with a check consumers cannot get into a lot of trouble. If more money is spent then the shopper has on the current account, the last written check will be rejected and account will be suspended until the balance is paid off. With credit cards however, every year more and more people get into debt.
Credit cards. It is nearly impossible to function in today's society without one. From making airline, car or hotel reservations to making purchases on the Internet, it has become essential for everyday living. And credit card companies are trying to make it easier to get one.
Competition for credit card customers has become extremely intense. Companies are looking for whatever customers they can get, wherever they can get them. Frequently this brings credit card marketers to campus, where each year there is a guaranteed new crop of potential customers. By signing up more customers earlier, the card companies hope to establish a type of brand loyalty that will carry far into the future. In the next few months, students everywhere will be offered free T-shirts, water bottles, long distance, pizza discounts, Frisbees, backpacks, hats, pens--you name it--all in the name of marketing credit cards. However, many students receive credit cards with no idea of the impact that misuse can have on their future.
However if you have a $1,000 balance on a credit card with 18 percent interest, and you merely pay the minimum balance every month, it could take you over 12 years to pay off this debt. And did you rack up that $1,000 debt buying books or emergency car repairs or trips home? Or was it the latest CDs and the last-minute Spring Break getaway? Think about it the next time you are tempted: do you really want to spend the next 12 years paying for a $15 CD? According to a 1999 study by the Consumer Federation of America, expanding credit card debt is quickly becoming one of the most severe threats to academic success on college campuses. This study, conducted by sociologist Dr. Robert Manning, a visiting professor at Georgetown University, suggests that credit card marketing "on college campuses poses a greater threat than alcohol or sexually transmitted diseases." If you have already racked up substantial credit card debt, you are not alone. Dr. Manning's study estimates that nearly 20 percent of students may have credit card debt in excess of $10,000. He goes on to indicate that many of the actual numbers are difficult to obtain due to refinancing and debt consolidation loans. Which brings up another issue--that of using student loans to pay for credit card debt.
Student loans are financing for you to pay college expenses today based on your ability to pay tomorrow. Credit is extended to you without proof of income, so you can obtain the knowledge and skills you need to increase your lifetime earning potential. This credit--which is designed to help you prepare for your future--may take you up to 30 years to repay. When you think about the fact that you will generally graduate from college with well over $10,000 in student loan debt alone, you might want to reconsider running up your credit card for that 'must have' item at the mall. According to Nellie Mae, a student loan provider, the average college undergrad has $1,843 in credit card debt. College students and administrators have weighed in on the effect of aggressive card marketing on campus. In many instances, it has led to depression and students leaving school. Of the students I spoke with, many of them were responsible for...
Cited: "Credit Card Use, 1989-1998." 5 May 2003 .
Cambridge Consumer Credit Index. " Cards with Rewards." 5 May 2003 .
Mae, Nellie. " Credit Card Debit for students." 5 May 2003 .
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