TIGER TV ONLINE REPORTER
Credit card debt can be a financial danger to students, according to vice president of marketing for Campus Federal Ron Moreau.
When students get credit cards in college they will often choose to make the minimum payment on it while continuing to build up more debt on the card. This cycle continues, putting students deeper into debt and paying interest rates between 12 and 25 percent, Moreau said.
“You end up making minimum payments and the debt grows exponentially,” Moreau said.
One consequence of getting into debt is a poor credit score.
“The minute you’re late paying you’re reported and your credit score is hurt,” Moreau said.
Every time an individual doesn’t pay on time they are reported to one of the three credit bureaus- Equifax, TransUnion and Experian- and they’re labeled a slow payer as their credit score goes down.
A bad credit score can lead to difficulty getting loans and making large purchases and even difficulty getting a job. Employers often check credit as part of their hiring process, and a bad score can hurt a candidate’s qualifications.
“Poor credit can cost you jobs,” Moreau said. “It’s part of who you are; you need to treat it with utmost respect.”
Credit card companies often target college students with pre-approval offers in the mail and offers of free merchandise such as t-shirts for signing up. The companies know students are likely to keep a card all their lives once they get one.
“Credit card debt is dangerous,” Moreau said. “When students get out of school they have loans that can take 20 to 30 years to pay off … They should hold off getting one unless absolutely necessary.”
While shopping binges and bar tabs aren’t considered absolutely necessary, having a credit card for emergencies and building credit for use after graduation is.
The Credit Union is part of Campus Federal, a non-profit campus organization dedicated to helping LSU students and alumni with their finances and offers programs like the student credit builder. Students have the option of taking out a loan or using a low-limit, low-interest credit card to build credit without the risks of accruing debt with a credit card company.
As for students who have already fallen into debt, options include stopping use of the card and paying off as much as possible every month and/or a consolidation loan. Moreau advises those students in debt to make an appointment with the Credit Union.
“Any student who feels they are in that situation should come talk to a Credit Union advisor,” Moreau said. “It’s free, and we will help them get out.”
If students have to have a credit card, Moreau said they should do everything possible to pay it off every month within a two-day grace period of when the payment is due. This way they won’t contribute to America’s total credit card debt at the end of 2008, which was $972.73 billion, according to www.creditcards.com.
“It’s so easy to get caught up with it,” Moreau said. “Live within your means and protect your credit score and you’ll stay out of debt.”
