ParentNET
A slice of campus life written by an MTU student

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On Friday afternoon, students can participate in an end-of-the-year tradition called Spring Fling. It serves a campus community eager to relax and have fun before the serious business of final exams begins.

Students, Credit Cards, and Risks

When talking to students, parents may forget to mention credit history and credit cards. Credit card debt among college students is growing at an alarming rate.

It is not very uncommon for a college student to receive a lot of credit card applications through mail, email, and even campus advertisement. The applications make the student feel very special by sending them specialized and personalized offers. Students, almost all with no credit history, are approved easily with a substantial credit line. They start spending the “easy” cash without paying any monthly bills or the minimum amount. The next thing they know is that the late fees, interest and other charges, have snowballed and now they have nowhere to go.

According to a survey done by Nellie Mae, an education loan provider:

	Eighty-three percent of undergraduate students have at least one credit card.
	More than half of all first-year students (54 percent) have at least one credit card with the average number of cards at 2.5.
	Among those students who have cards, 26 percent have four or more.
	The average credit card balance is $2,327. Twenty-one percent of undergraduates who have cards have high-level balances between $3,000 and $7,000.
	As students progress through college, the number of credit cards and amount of credit card debt increases.
	Undergraduate students at four-year institutions are graduating with a combined credit card and education loan debt of $20,402, with credit card debt representing 16 percent of the debt owed.

If not used wisely, the ramifications of a poor credit history on a student’s financial future are significant. If a student doesn’t pay bills on time, the poor payment record will be included in a credit history for up to seven years. As a result, the student may not be approved for an apartment, may not get a job offer, may not qualify for a car loan or mortgage, and may be denied for certain insurance coverage.

However, a credit card does offer a lot of convenience. They can be very useful in emergency situations. Cards can also help students learn about their spending styles and educate themselves about credit history. Nowadays, since everything is conveniently available online, a card is required to make the purchase. For a study abroad student, a card is a necessity more than a luxury.

Students, especially first-years, need to know that even though there may be “rewards” attached to credit cards, they do not come without any charges. The fine print should be read carefully before applying for a card. There is no such thing like a free lunch!

Wells Fargo Bank has listed a few signs of credit card trouble on their website. They are:

	Not knowing how much is owed
	Charging daily living expenses on a credit card
	Having little or no savings for emergencies
	Being able to pay only the minimum due each month
	Using one credit card to pay on another credit card
	Using cash advances to pay bills
	Getting calls from creditors asking for payment
	Avoiding creditors, ignoring bills, or not opening bills

There are always alternatives to credit cards. Debit cards or prepaid cards work just like credit cards except that the spending is limited. It can be a good start for students.

Parents should talk to their students about disciplined credit usage. If used wisely, it can be of great help down the road and will also help build a strong credit history. If it is abused, it also has the potential to inflict all kinds of stress on students and parents alike.

During my first year, credit card issuers were stationed in one of the main buildings on campus. They were giving away T-shirts and other cool items just for signing up, and one application was good for nine different cards! Since then, I think Tech struck down hard on such people and they are not allowed to solicit on University property.

This is the fourteenth week of the semester. One more week to go for the end of the term and then the finals week before we get done for the year. For seniors like myself, it means the last two weeks (ever) as an undergraduate! If your student has complained about lack of sleep, not having enough time for meals and twenty-four hours not being enough, then you should not be worried. It’s normal for this time of year for Huskies. However, you should be worried if your student is not complaining for the same reasons!

Until the last week,

Thought of the Week:  "The world is divided into people who do things and people who get the credit.” —Dwight Morrow

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