Dallas, TX – It's that time of year, and how exciting for you. The little one you once held in your arms is now going off to college. Sure, you've had the talk about the importance of getting good grades and establishing skillful study habits, but what about the talk on money management? I'm Maxine Shapiro with KERA Marketplace Midday.
How's this for a reality check? In 2001, 83% of college students had at least one credit card with an average balance of $2,300. Maybe you think that sounds reasonable. But according to the same survey by Nellie Mae, a leading national provider of student loans, "college students will double their credit card debt and triple the number of cards they have by the time they graduate."
Yes, the economy has changed since 2001, but our use of credit cards hasn't. There are temptations all around for college students to live beyond their means. Applications bombard their mailbox, solicitation tables are all over campus for free things when they apply, and then there's the rebellious factor: "I couldn't have it when I lived at home, so I'm going to buy it now!"
So sit down - right now - and go through the educational process. Here's what you say: you don't buy anything you don't think you can pay off at the end of the month. This is why most experts recommend debit cards. Checking accounts are still the number one method of payment. Explain interest rates. Sure, an interest rate can start low, but one late payment and we're talking 28%. Talk about late fees and annual fees.
And if you're still getting a blank "whatever" stare, here's some sobering facts to wake up anybody. With bad credit you can't open a checking account, you can't get another credit card, you can't move into an apartment (that ought to get 'em), you can't buy furniture or a computer, interest on car loans will double, and in some cases where employers run credit checks, you can't get a job.
Now isn't it worth the talk? For KERA Marketplace Midday, I'm Maxine Shapiro.
Marketplace Midday Reports air on KERA 90.1 Monday - Friday at 1:04 p.m.
Email Maxine Shapiro about this story.