Ryan ChartrandYour meal points are almost completely used up and it’s not even halfway through the quarter. The food on campus was great the first week but now it tastes insipid. The weather’s changing from summer to fall and last year’s winter clothing is, well, last year.
All of a sudden that credit card you signed up for in order to get the plastic basketball hoop with complementary foam ball seems to be helping out a lot with weekend excursions, more pleasurable dining experiences and fashionable threads.
The credit card companies feel your pain.
As college students, we are consistently bombarded by credit card advertising, whether it be through the mail, via telephone calls, social networking sites, on-campus tabling or yes, even your student newspaper’s Web site.
Why such aggressive marketing to a crowd of wet-behind-the-ears college students?
Simply stated, it’s profitable.
A study by the Federation of States Public Interest Research Group released in March found that undergraduates are signing up for plastic in considerable numbers, and even further, are accumulating substantial amounts of debt from the use of those cards.
The study, which surveyed 1,500 undergraduates from 40 schools in 14 states – eight in California – found that of the 66 percent of students reported having at least one credit card and of that total, 70 percent reported being responsible for their own payment. Of that 70 percent, more than two-thirds said that they had a balance.
It makes sense that college seniors were the most hard hit by the debt, with an average balance of $2,623 compared to the freshman who averaged $1,301 on their balances according to the survey. More time at school equals more time to rack up debt.
So let’s think about this for a second.
A hypothetical student with a hypothetical credit card balance (for one card) of $1,900, a rate of 12.49 percent, who makes the hypothetical minimum payment of $40 a month, won’t pay off their hypothetical card debt for 65 months. That’s more than five years and only if you stop using the card!
It’s not too say that all students are irresponsible when it comes to credit cards. One of my co-workers said that she uses hers primarily for air travel to see her family on the east coast. A friend at another school said that he leaves his card at home and only uses it to fill up his gas tank.
There are others, however, that don’t have the will power to live within their means and find themselves continuously struggling to get ahead on their payments.
The consequences of defaulting on a credit card are devastating to your credit score. A low credit score is potentially hazardous to your capacity to borrow in the future, meaning you might not qualify for the loan on that hybrid car you planned on buying after graduation.
Personal credit can be directly tied into the current state of the American economy as well. Not just students, but a majority of Americans are living outside their financial realms. Risky lending practices, and the American addiction to consumption, has forced credit companies and individuals to take on more debt than they financially can afford and as a result, those companies go bankrupt, the credit that remains available becomes harder to get and the plastic fa‡ade of the economy crumbles to reveal the lack of real assets that are supposedly the driving force behind the country’s economic previous prosperity. We are, in short, a nation of debtors.
College students need to be educated about the potential dangers of credit cards well before they get to college.
On a broad scale, state and local governments should look into updating those Leave-It-To-Beaver-era curriculums for high school economics classes and focus more on modern economic topics such as how credit cards work, what a credit score is and potential dangers of defaulting on loans and credit cards.
On a more local scale, Cal Poly should prohibit all credit card tabling on its campus. If students really wish to get a card they can go through other channels such as Facebook ads or through bank offers.
Cal Poly should also include a mandatory 1-unit credit management course in the lower-division general education requirements in order to at least familiarize students with the basic concepts.
On an individual level, students need to be conscious of their own spending habits with regards to credit cards. If you have a balance and are making the minimum payments, seriously consider cutting up the card and live according to the real cash you have.
Joshua Ayers is a journalism senior and a Mustang Daily reporter.