Yahoo! Finance Columnist, Anya Kamenetz wrote a very interesting and in your face reality article about the danger of credit card debt.
What exactly is the problem with credit cards?
1. The aggressive, misleading marketing: “You are pre-approved” letters for your dog.
2. The fine print: Fees, penalties, and high interest rates.
3. It’s the debt, stupid!: Credit cards let you buy stuff you can’t afford with money you don’t have. They make you poorer in the long run, plain and simple.
Personally, I choose 4. All of the above.
Read the rest of Anya Kamenetz’s Yahoo! Column.
Credit Card Debt Statistics:
The survey was released in September 2007 by Nellie Mae, Graduate students now average $8,216 in credit card debt, according to a new survey, which also says students wish they had learned earlier about handling money.
The average graduate who borrowed for college leaves school with almost $20,000 in student loans and about $2,000 in credit card debt. About two-thirds of students borrow for school, according to Chicago Tribune. You’re in deep debt before you send your first resume to find a job.
“These credit card issuers circle the campus like sharks circling a fish,” says Elizabeth Warren, a Harvard Law School professor. “Companies are turning over every possible rock to find a live human being to take one of their credit cards and use it. The college-age student is a prime target.”
Each fall, concerns about young adults falling prey to aggressive credit card marketing resurface as 17 million college students flock to campuses across the USA. Nearly a dozen states, including New York and California, have made it harder for card companies to market on public campuses. And a growing number of colleges, on their own, have begun to impose restrictions.
But these steps belie a stark reality: Credit card marketers today are as aggressive as ever — just more creative — about reaching students. Some solicit students by phone or e-mail, and flood their mailboxes with credit card applications. Other marketers set up tables around heavily trafficked campus areas, hawking free sandwiches or pizzas to hungry students to get them to sign up for a credit card.
At universities that restrict credit card solicitation, marketers legally bypass the rules by moving across the street from campus. It takes about five minutes to fill out a credit card application. In a few months, students can fall deep in debt, charging beer and designer jeans, as well as school supplies, to these cards.
“Graduate students are apparently doing what the rest of the nation is doing: using credit cards to sustain their lifestyle,” says Gail Cunningham, vice president of business relations for Consumer Credit Counseling Service of Greater Dallas.
The study, “Graduate Students and Credit Cards in 2006: An Analysis of Usage Rates and Trends,” suggests that:
• The more time spent in graduate school, the more likely a student is to grow his or her credit card debt level. On average, older graduate students (aged 30-59) carry $12,593 in credit card debt, almost twice as much as their younger counterparts (aged 22-29) who carry an average debt of $6,479.
• Only 20 percent of all grad students pay off their monthly balances.
• The average outstanding balance on credit cards held by graduate students rose 10 percent since 2003 from $7,831 to $8,612.
• Ninety-four percent of graduate student survey respondents used credit cards to pay for some portion of their direct education expenses, primarily textbooks. Twenty-eight percent admitted paying for part of their tuition with credit cards.
• Ninety-three percent of grad student respondents would have liked more information on financial management topics before they started school and would like financial management education now.
• The percentage of graduate-level students who have at least one credit card decreased only slightly in the past three years (from 96 percent to 92 percent).
Who is Anya Kamenetz?
Anya Kamenetz is a freelance writer living in Brooklyn, NY. She is a contributing writer for Fast Company magazine and a columnist for Yahoo Finance. She is the author of the popular book “Generation Debt” and Generation Debt Blog
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