One in four college students leaves with more than $5,000 in debt, a TrueCredit.com study shows. One in 10 leaves with over $10,000 in debt.
When you’re just graduating college, getting your first real job, and trying to make it on your own, credit card debt is the last thing you need to be worried about. You’ll have rent and utilities to pay, possibly a car note, and student loans if you used them. That’s more than enough for one 20-something to think about each month.
Before you head off to campus this fall, make sure you understand some basics that will help you stay out of credit card debt.
Credit Card Companies Love College Students
College students are a credit card company’s prime prospect. (If you haven’t seen the documentary Maxed Out, rent it before you step foot on campus.) They like to get you while you’re young for a couple of reasons. First, they have a strong hunch that your parents will bail you out if you run up your credit card bill. Second, you have a long credit life ahead of you. That means lots of years of interest payments for the credit card companies.
Credit card companies are so hungry for college students, they approve applications even then students don't meet the criteria. For example, a college student can get a credit card with no job, no verifiable income, no credit history, and even without a co-signer.
Did Someone Say "Free?"
The marketing tactics credit card companies use to lure college students prove the companies truly understand their demographic. And that’s not really a compliment.
Expect to see credit card company representatives on or near campus giving out free stuff for credit card applications. They get you to sign up for a credit card by offering t-shirts, sandwiches, and school mascot bobble head dolls. Free things are nice, but this isn’t the way to sign up for a credit card.
It isn't just a free soda you're getting when you sign up for a credit card. You're signing up for a ticket to the Broadway musical Debt starring you. Whether you attend or not, is up to you.
You'd Better Shop Around
When you’re ready for a credit card, don’t sign up for the first one that comes your way. Instead, you need to comparison shop the way you would for a new car. Look at a few different credit cards and pick out the one that’s best for you. At a minimum, your credit card should have no annual and a low interest rate. (See How to Choose a Student Credit Card.)
Tables and booths on campus is just one way credit card companies try to get to students. They still use the old-fashioned method of mailing credit card offers to students. (Find out how to stop them).On some campuses, bookstores and supply stores are the salesmen, handing out pamphlets for the cards and encouraging students to sign up.
Are There Enough Laws?
Some states, like California, Texas, Oklahoma, and New York, already have rules that restrict credit card marketing on campus. Far more states don’t have legislation to prevent credit card companies from harping on unsuspecting college students. So, students have to be on guard against the schemes.
The bottom line – no matter how attractive the card or the free gift may seem, you’re better off looking for your own credit card. Learn how to use credit responsibly so you’re not the one out of four that graduates with thousands in credit card debt.
