College Students Should Be Wary about Credit

Article excerpt

I can still recall the humorous ordeal I'd encounter as a college student years ago whenever I made the decision to phone home collect.

"You say an Andrew Leckey is calling?" asked my mother, sensing her son was calling collect because he was tapped out and seeking cash. "No, it can't be the Andrew Leckey we know, since he would handle his money well and wouldn't pester his poor parents with a collect call."

Giggle from the operator. Charges not accepted.

My, how times have changed. Today's college students, thanks to their estimated $28 billion in spending power, are showered with their very own phone cards and credit cards.

Besides mailings and bookstore handouts, makeshift stands for the hawking of various cards are set up on campus quadrangles across the nation. Students don't need a co-signer and can run up bills without anyone else's OK.

Oh, there is one thing: They do have to pay off those bills. That's why it's important for students and their parents to have a firm understanding about sensible use of all plastic, how specific cards function, the high cost that can be incurred and the dangers of bad credit ratings.

"One friend of mine received a credit card with a $7,500 limit, even though she just works at the admissions office making $5.50 an hour," related Christa Bourg, a 20-year-old junior at New York University from Arcadia, Calif.

Another friend got so hopelessly into debt with several credit cards that he was denied further credit and, at the age of 21, the cards he had were taken away.

Actually, the 1.6 percent to 1.9 percent default rate for credit cards issued to college students is considerably lower than the 4.2 percent default rate of the general population. …