Credit cards and college students
By Stefanie Ickowski

While walking through the Buffalo State College Student Union during Bengal Pause, students are enticed by offers of free shirts and coffee mugs in exchange for filling out a credit card application. Higher interest rates and penalty fees are generally applied to student credit cards , so will that freebie be worth it?

A study conducted by the U.S. Public Interest Research Group, found that students who obtain credit cards at campus tables have higher unpaid balances than those who do not.

Nellie Mae, a college loan provider based out of Braintree, Mass., found that students attending a public college graduate with an average of $17,000 in student loan debt . If that debt is carried among several credit cards that dream job salary may be funneled into paying off your balance before it gets bigger.

That same study came up with several other findings regarding students and credit card use:

  • 83 percent of college students have a credit card
  • 47 percent have four or more credit cards
  • 27 percent carry balances in excess of $3,000
  • While 54 percent of freshmen have a credit card, only 23 percent have a student loan

Kent McGowan, Director of Financial Aid at Buffalo State recommends that students “use loans before credit cards,” to pay tuition. A student loan is considered to be a positive investment and has much lower interest rates than that of a credit card. According to Sallie Mae, another company which provides education loans, a Stafford loan's interest rate varies, but will never go above 8.25 percent. Most credit cards offered to students, however, have interest rates upward of 13 percent. And since credit cards can be used to buy most anything, it is easy to run up a big balance.

If a credit card is absolutely necessary, shop around for the best rates and try to use it for emergencies only.

Credit counseling and consolidation services that make monthly payments more manageable are available for those already in high debt.

Unpaid balances and chronic late payments can affect the ability to secure a loan for a new car or house. So while those freebies in the Student Union look tempting, consider how yet another credit card can affect your future.

Email: ickosl85@mail.buffalostate.edu


Photo: Stefanie Ickowski According to www.bankrate.com , the annual percentage rate for cash advances on student credit cards can reach up to almost 23 percent.