Thursday, November 7, 2002
More Bang for Your Buck: Extra Credit
On college campuses across the country, students are receiving more than a formal education. They're getting a degree in debt. It turns out a growing number of undergraduates are failing when it comes to managing a credit card.
(WSVN) Before most college kids enter the real world, they may need to take a real hard look at their finances.
Amy Harmon, a student, says "There all maxed, all 5 are maxed."
Amy Harmon is about five thousand dollars in credit card debt and she's only a junior.
She says, "When I got approved I just started using it till it got maxed."
From plastic paradise to plastic peril, Amy's not alone.
It turns out one in five college cardholders carries a debt of more than ten thousand dollars.
Joe Zunzunegi, Consumer Credit Counseling Service, says "When the college student gets the credit card at 6-7-8% and they dont read the fine print and a year down the road its doubled even tripled, they can get into hot water really fast."
And that hot water can be scolding when kids buy now, pay later.
They quickly learn a month full of pizza, coffee, clothes, and movies adds up.
"If you can only afford to meet the minimum payment that's a clear indicator that there is difficulty."
Other indicators include taking a cash advance from one credit card to pay for another... or if you have to ask your parents to bail you out.
"We teach them successful budgeting and how to make the most of the money you have."
At the University Of Miami, students can take a workshop on credit card management.
"We want to be proactive. We want to show them what happens before they get themselves in a situation that might be uncomfortable."
That includes showing the students what happens when they acrew interest and spend over their budget.
"Budgeting is such an important tool... and if you budget for everything including entertainment, going out to dinner, you'll find you have enough to cover all expenses. you won't have to reach in to use a credit card."
In the mean time, if you're trying to dig yourself out of debt, pay the most you possibly can on the card with the highest interest rate then pay the minimum plus ten dollars on each additional card.
"It's pretty scary whats coming out of college right now and where they'll be in 10 years."
That's a lesson Amy is learning firsthand.
"I will never have a credit card again, that what it tought me i will pay everything w/ cash or write a check or use a debit card."
Kids should also remember their credit history will stay with them for seven years.
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