Credit cards don’t pay off for college students


Swipe and go.

For many students, credit card use is a frequent practice, and it often starts when they first leave home. Students can be bombarded with up to a dozen credit card offers when they first arrive on campus, and once they are approved, spending can be hard to stop.

According to Nellie Mae, a leading student loan lender, 81 percent of college students have at least one credit card, and the average student graduates with $3,000 in credit card debt.

Credit card companies target students

“Students are targeted by credit card companies because they are an easy target and not very educated when it comes to personal finance,” said Fred Brock, assistant professor of journalism and author of “Live Well on Less Than You Think: The New York Times Guide to Achieving Your Financial Freedom.”

Many credit card companies take advantage of the psychological power a credit card gives a person, which results in impulse purchases that usually take students years to pay off, said Brock, a former business editor and columnist for The New York Times.

“But in the society we live in today, it’s hard to live without a credit card, and there are emergencies that occur when a card comes in handy, like buying airline tickets and buying things online,” Brock said.

Credit can be a good thing for students, Brock said. They need to build a good credit history and have a credit card in case of emergency, but many students are building more debt than they can handle.

Minimum payments don’t pay off

Many students make the mistake of charging more than they can afford. When students only pay the minimum balance it can take years to pay off, Brock said.

According to, if a student has a $500 balance on a credit card with an 18-percent interest rate, and pays only the $15 minimum payment each month, it will take 74 months – more than six years – to pay it off. In that time, the student will pay $298.94 in interest, for a total cost of $798.94.

Online calculators can help students make decisions about credit cards, Brock said.

Retail cards often have high interest rates

Most retail stores have store credit cards that charge an outrageous amount of interest, Brock said.

The prime rate for credit card interest rates are 8.25 percent, but some store credit cards charge up to 30 percent, Brock said. Prime rate is the rate banks charge to their most credit-worthy customers.

Many stores use incentives, like a discount on the first purchase, to reel students in.

Crystal Cradon, junior in psychology, said every time she went into Victoria’s Secret, the associates always offered her the Angel Credit Card and used the discounts as an incentive. Cradon said she always considered signing up for the card, but didn’t.

“One time I finally gave in after they offered me coupons and free gifts,” Cradon said.

Cradon said she usually doesn’t spend more than she can pay off in a month.

“The only reason why a student would need to get a store credit card is if they are making a big purchase and want to use the discount for opening a card, then pay it right off and cut up the card,” Brock said. “My advice is to avoid these cards at all costs.”

Many retail stores motivate their associates to convince customers to apply for credit cards by using incentives.

Dionna Brown, sophomore in kinesiology, is an associate at a retail store in Manhattan Town Center.

“We are supposed to ask everyone to sign up for the card, but some people just don’t want it,” she said. “Some customers feel so hassled that they say ‘no, I don’t want a credit card,’ before we even start ringing them up.”

Students can’t afford to be in debt

Students should do research on credit companies before accepting the pre-approved credit offers and before signing up in stores for cards, Brock said.

“Students are the last people who need to be in debt, especially because of debts that they will graduate with from student loans,” Brock said.

Brock said students should only accept credit cards with high interest rates if they can pay off the entire balance at the end of the month.

“Debt is a huge prison,” Brock said. “If you are in debt, you are not free.”