Credit card debt doubles by graduation

2009-11-03T02:15:00.001-08:00

College students usually have two credit cards at the beginning of college, and by the time they graduate, they may have around six, said a co-founder of an educational credit Web site.

Adam Levin, co-founder of Credit.com, said that by the end of college students' freshman year, they have $1,600 in credit card debt, and by the end of their senior year, it doubles.

"During their time at college, students are introduced with easy access to credit and without the proper management knowledge of credit cards, they become a very dangerous financial tool," he said.

Levin was a former director of New Jersey Division of Consumer Affairs, and he created Credit.com to provide online information for solutions to financial management, according to Credit.com Web site.

Abrir Abboud, a junior industrial design major, said she doesn't have a credit card but can understand how spending can spiral out of control. "I shop when I am stressed," Abboud said. "I like getting something new, and it relieves stress when I buy it. College adds a lot of new stress, and having a credit card is a way for students to be able to relieve stress and think about the cost later."

Marco Pagani, an accounting and finance assistant professor, said it is important to understand how to recover from debt. "If students are in debt, it is important to arrange your cards by the highest interest rate," Pagani said. "Then pay off your debt the fastest with the cards that are going to receive higher fees." Credit cards should be cautiously used to establish credit history, Pagani said. "Never be late with a minimum payment on credit cards, because that will cause more fees to be added onto the card," he said.

In 2009, 91 percent of undergraduates have at least one credit card, up from 76 percent in the same study conducted in 2004, according to the Credit.com Web site.

In 2009, 92 percent of undergraduates use credit cards to pay for educational expenses and 30 percent admitted to using their credit cards to pay for college tuition, according to the Credit.com Web site.

Thomas Moschetti, an accounting and finance lecturer, said students don't consider the cost of the items they purchase when using a credit card. "It is important to never have a balance on a credit card," Moschetti said. "The banks encourage students to use their credit cards at all times, but it is also the students' responsibility to monitor their spending."

Currently, the average interest rate for credit cards is 11.51 percent, according to the Bankrate Web site.

Bankrate was established in 1976 as a print publisher for the banking industry, according to the Bankrate Web site.

Juana Ramirez, a junior behavioral science major, said she would use her credit for necessities such as food and rent.

"Students get their needs and wants confused when they are using a credit card," Ramirez said. "It is important to use a credit card properly." Kathy Nguyen, a manager at the Santa Clara Street Chase Bank, said Chase Bank's application for a credit card requires verification of an annual income and other expenses. "The credit card limit varies depending on the applicants' income," Nguyen said. "The lowest limit I have seen is about $500, and the highest is about $2,000.

"The first six months of our lowest level credit card is zero percent. After that it depends on the applicant's credit history in the past six months, but there is usually around a 9.9 percent interest rate." Junior nursing major Danielle Boyles said she has eight or nine credit cards. "I pay off my cards every month," she said. "I use my credit cards depending on what points I need, or discounts I get when I use each card. But each card is paid off in full when the bill comes." Josieline Calubaquib, an administrative support coordinator for the accounting and finance department, said students and credit card companies need to take responsibility for credit card debt. "My son went into debt, because he said that his allowance was too low, and he opened his credit card to keep up with his friends," Calubaiqub said. "Students should have more education on how credit cards work." Sarah Vue, a sophomore civil engineering major, said she doesn't like credit cards. "I am in debt enough with student loans," Vue said. "I have a friend who uses her credit card when she doesn't know the exact amount in her checking. Otherwise, I think credit cards are stupid."

Doubles by graduation

Credit card debt doubles by graduation