Credit Cards: Helpful Tool or Lifelong Headache

College of Southern Nevada

Better to use cash


By Li Han

We’ve seen bank representatives on CSN campuses trying to get students’ attention. What exactly are they trying to sign us up for?

Financial institutions, such as Bank of America who recently was on campus, have programs specifically made for college students. They offer special bank accounts, student saving tips, and budgeting tools. They also offer a controversial item that is being solicited to college students: credit cards.

Credit cards can either be a helpful tool or a lifelong headache.

Credit cards allow users to get the goods now and pay later, which sounds good to most college students especially the ones who are working part time and making minimum wage. However, racking-up debt can cause serious problems for students.

On average, a student graduates college with approximately $4,100 in credit-card debt. Statistics from Salle Mae, seller of student loans, banking and insurance products, shows that 84 percent of college students have a credit card. A study stated that 14 percent of students who possess a credit card carry a $3,000 to $7,000 balance and 10 percent of students owe more than $7,000.

Many college students pay their cards back with minimal payments, and most do not know the importance of paying bills on time. If a student has a $1000 credit-card bill and made the minimal payments of $50 a month with an interest rate of 13.81 percent, it would take about 12 years to pay it off. Ouch!

Professor O’Toole, finance and accounting professor at CSN who teaches classes about personal finances, says sometimes these card companies, “Calculate those minimum payments so the greater amount of it goes toward the interest they earn, leaving the principal, what you owe, so that you can continue to pay them interest.” This keeps the credit card holders in the red.

There are also late fees and over-draft fees. O’Toole says, “If you do not make the minimum payment but some portion of it, pay late, or not make the payment at all, you are doing yourself more harm than good by damaging your credit instead of developing a good credit rating.” The average late fee is $35.

Students who do not have the proper knowledge about credit cards will likely misuse them.

Saudy Talero, student at CSN who is trying to fix her credit debt, says she has debt of approximately $3000 with a department store. She says, “As a student, mom, and head of the house, it’s difficult to say no to credits cards.” She goes on to say, “The principal reason why I owe money is the high interest rate.” She suggests to other students, “If you are in difficult times its better for you to make minimum payments but if you want to get rid of it faster, it would be better make higher payments on the card.”

Teodora Garan, an immigrant to the United States who owns two credit cards, says, “My mom taught me that if I want to build a good credit history, I have to pay always on time my credit cards and my bills.” She was lucky enough to receive good advice.

Students need good advice on spending, budgeting, and debt. Before getting a credit card, students must be informed.


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