LV Life

Temptation places students in debt

According to University Bookshoppe Manager Julia Asquith, during the first two weeks of the spring semester, 50 percent of ULV students used credit cards to purchase textbooks. According to the ULV Administration and Finance Department, for the 94-95 academic year, the gross sales with credit cards were $5.7 million, a total of 8,701 transactions. That total reflects all ten of the University’s campuses. / photo illustration by Starr Carroll
According to University Bookshoppe Manager Julia Asquith, during the first two weeks of the spring semester, 50 percent of ULV students used credit cards to purchase textbooks. According to the ULV Administration and Finance Department, for the 94-95 academic year, the gross sales with credit cards were $5.7 million, a total of 8,701 transactions. That total reflects all ten of the University’s campuses. / photo illustration by Starr Carroll

by Lori Cruz
Staff Writer

Visa. Mastercard. American Express. Discover. For college students, there is no escaping the lure of credit on campus. Unfortunately, it is a lure that can plunge students deep into debt before they even graduate.

Sophomore Maria C. Franco calls it “cruel” that creditors aim for students.

“They [the companies] know we can’t pay off the bills,” she said.

Junior Amy Boyle, who received her first major credit card just one month ago, sums up a common situation among credit card holders—“I thought I’d use it only for emergencies, and now it’s maxed out.”

The College Board, a non-profit association, states that on average, each college student spends between $2,100 and $3,400 each year on books, transportation and recreation.

These numbers make credit companies salivate for new customers.

Aside from having applications from major credit card companies stacked in places like The Spot and the entrances of Woody and Miller Halls, students are also lured by direct mail to their homes or on-campus mailboxes.

James Potter, junior, said, “Right now, I get a lot of pre-approved applications, but if I don’t have the money, I don’t get it.”

According to the Financial Aid Office, approximately 75 percent of students receive some sort of aid, usually in the form of loans.

That means that once the college years are over, the student-turned-graduate will need to pay off those loans.
For many, monthly credit card bills become an added burden.

For Potter and senior Vera Crist, that is the reality. Crist considers herself “mildly in debt” with her credit cards. Both also have to consider school loans that they have accrued.

“I think about [the school loans] from time to time and how they are adding up,” said Potter.

Although the lure of credit is tempting to most, some students have managed to avoid it.

“I never apply,” said junior Alejandra Quintanilla. “I am not working so I know I can’t pay them.”

According to the March issue of Details magazine, there are some things students need to know before they sign on the dotted line.

First, remember, said Details, that everything is negotiable. There are many card companies out there and they all offer different rates. Check out the facts and shop around. The average rate for a credit card right now is 19 percent. For every $100 on a credit card when a bill is paid, $19 goes toward the interest alone. So, if a minimum bill is $20, only $1 goes to pay the principle of the bill. There are companies with standard low rates and they need to be investigated first.

Something else to know is that there are different ways to get credit, even with a less than stellar credit history.

There are secured credit cards, which allow cardholders to put money into a savings account that acts as collateral for the card. A few banks will also connect a credit card or ATM card to a bank account, which acts like a debit card. If there is $100 in the account, there is $100 credit.

Also, be aware of the fine print. A credit company can raise its interest rate or cancel a card at any time if that is part of the agreement. Read everything first. According to Consumer Reports, a favorite tactic to lure consumers into obtaining credit cards is to offer an initial low short-term rate. After a few months the company will raise the interest rate considerably. Typically, they will do this after the card has a substantial balance accrued.

Lastly, a credit extension is not always to the cardholder’s benefit. A raise in a credit line helps the company, not the consumer. This is a money-making venue for the company, which raises the limit and the consumer charges more and pays more in interest.

If all this is too bleak, understand this: Consumer Reports states there are two types of credit holders, those with good credit and those with bad. Unfortunately for most, there is no happy medium.

There are ways to get out of debt once students find themselves in it. One avenue is Consumer Credit Counseling Service of Los Angeles. The non-profit organization can help with bill consolidation. This service offers free seminars and free counseling to help people in debt get on their feet again. Their number is (213) 808-4222.

Lori Cruz
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Starr Carroll
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