Student credit cards: Be careful taking on debt

As kids grow older, they find that living does cost money and in most cases their parents will not be able to support them forever. When students graduate from high school and enroll in college, they are more financially independent and have increased expenses. And many will decide to get their first credit card.

“When I was finishing my LNA courses my mom pushed me to look into credit cards (in order) to start building my credit,” said Bridgett Isabelle, a 20 year-old licensed nursing assistant (LNA) from Hill, N.H.

Credit cards are a way to build credit, which a person needs in order to apply for mortgages or car loans. However, credit card companies have started targeting younger demographics who may not fully understand the gravity of the matter, which puts them at a higher risk of misusing their credit cards and ringing up charges they can’t pay off.

Isabelle said her mother had convinced her to look into getting a card once she had a LNA job set up at a local nursing home. She convinced Isabelle that it would be a good idea to start building credit for bigger purchases in the future.IMG_4896

“I have the Capitol One Platinum card with a $500 limit and the Discover It card with an $800 limit,” said Isabelle. “Right now I use them for gas or shopping so they stay active and I can continue to build my credit.”

There are several different options and for some cards, like the American Express Serve card, there is no credit check, which is appealing to college students.

“I signed up for the Discover It card a few months ago,” said Ryan Lund, a 20 year- old computer science major from Anchorage, Ala. “I only use it for emergencies or when my bank card gets low.”

Lund said he and his parents decided to get a card when he received an offer from Discover It in the mail.

While building credit is important in today’s society, studies cite the fact that some people in their early to mid-20’s do not understand the financial risks of having a credit card.

“I don’t think a lot of kids that age have a good idea of money management at that point, and before they know it they have credit card debt on top of their student loans,” said Trisha Ouellette, a mother of two kids in college, one of whom is this reporter. Neither of Ouellette’s kids have credit cards: They do have bank cards so they can access funds they earned and saved without spending money on a credit card, which has the added cost of being paid back with interest if the debt is not paid off monthly.

Logan Roth-Longe, 20, a freshman civil engineering major from Hinesburg, Vt., also decided to stick with just a bank card. “I don’t think I will ever get a credit card,” said Roth-Longe. “I plan on making enough money to live on without resorting to it.”

In agreement with Ouellette and Roth-Longe, a survey from the International Journal of Business and Social Science cites the risks of student credit cards. In 2012, 50 percent of college kids had at least one credit card and at least 86 percent had four or more cards, with an average debt totaling up to $4,100.

According to College Express (collegeexpress.com), students fall into danger of credit card debt because the cards can be “too convenient” and it is easy to lose track of how much is spent. The site also says that most students do not realize that credit cards can hurt one’s credit score, just as much as it can help.

While Isabelle owns two credit cards herself, she admits that having the cards can be dangerous to your financial health. “Currently my cards are both maxed out,” Isabelle said. “I have never missed a payment on them, but the temptation to spend is always there.“

While Ouellette is against credit cards for young adults, she admits there are always “exceptions to the rule.”

Nathan Tomaselli, a 20 year-old sophomore civil engineering major from St. Johnsbury, Vt., has a credit card through MasterCard. However, he said only got the card to build his credit and so that he can help his family with the Parent Plus loan after he graduates school. He has yet to put any charges on his card.

“I wouldn’t recommend any one my age get a credit card,” Tomaselli said, ” because not many people understand how to handle it and interest rates can get pretty high.”

With the dangers and damages of credit card abuse in young adults, programs are beginning to be put into place to help young adults become more responsible, like the 2009 CARD act. According to collegexpress.com, it is a program that requires students under that age of 21 to prove they can pay for the credit card by themselves, or they have to have a “creditworthy co-signer”.

Even though Isabelle has maxed out both of her cards and said it is hard to juggle bills and credit card payments, she does not regret her choice to signing up for them.

“I always make my payments early or on time,” Isabelle said, “and the credit I built allowed me to get approved for a new car without a cosigner.”

Isabelle does suggest to prospective credit card holders to try and save the charging for emergencies, or to only spend what you know you can pay back.

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