College Students and Credit Cards: High Balances or High Interest Rates?

Andrew_Johnson_communications_greenpathCollege students and credit cards: High balances or high interest rates?
by Andrew Johnson

GreenPath communications

Recently, we asked a few of our GreenPath personal finance counselors if they have worked with college students who had large amounts of credit card debt and/or high interest rates. This was part of an ask for a story that appeared recently in the Detroit Free Press here.

Some of the counselor replies:

From Marcel:

  1. What I see is that college students are often times targeted by credit card companies with “easy” money offers, i.e., credit card offers for those with little or no credit.
  2. They have short applications strategically placed throughout the campus meant to capture prospective college borrowers. When a college student needs some money, it’s hard to say no to one of those offers.
  3. The interest rates are usually not of much concern to college borrowers.  They are not shopping around for the best rate.  They usually are willing to take what is in front of them.

From SunShine:

  1. I work with clients who said that they didn’t know how to manage their finances and used credit cards irresponsibly.
  2. I’ve worked with clients who said they weren’t working (or not working much) during college and put living expenses on the cards.

From Christopher:

“I do come across college student with credit card debt but the debt load itself is usually on the lower end in most cases. A lot of times they call because they made some mistakes with credit, while they are/were away at school and want to talk about improving their score. Maybe they need to buy a car and struggle getting auto finance.”

Take Your Time

The main conclusion is that college students (or anyone, for that matter) need to do their homework, before applying for any kind of credit. Read the fine print, know the interest rate, payment schedules, late fees/penalties, annual fees and more, before agreeing to sign any contract. Don’t be blinded by any giveaways or main features of a card. Don’t be rushed into signing anything. Take your time and really get to know what you are getting into before getting a credit card.

For more information on college students and credit, visit GreenPath’s Student Loan Counseling section.

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