Newspapers / Elon University Student Newspaper / Dec. 1, 1994, edition 1 / Page 14
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December 1, 1994 Students learn credit card abuse the hard way Linda Findley Reporter Tim Crawley, a 1990 graduate of Elon College, learned the hard way that credit cards bnng debt, not freedom Dunng college, he racked up $4,000 on credit cards. Four years later, the debt still hangs over him. “I have tried to get a debt- consolidation loan to pay off the cards," Crawley said. “But 1 can’t get the loan because my credit is bad. It's a vicious circle.” Crawley fell into a common trap for college students: Too much debt on too many credit cards that they don’t really need. Today’s college students are flooded with offers for credit cards which they may not need and prob ably do not have the knowledge to use, says the director of a national Cl edit card education group. A 1992 survey found that 61 percent of college students have at least one credit card. More than two-thirds of these students got it before the end of their freshman year. Many of these cards start with limits as high as $1,000. The problem is students don’t ■ usually have the income to support a credit card But more important, they don’t have the education to understand what credit means, said Ruth Susswein, executive director of Bankcard Holders of America. A survey by American Express and the Consumer Federation of America found that 70 percent of college juniors and seniors did not know that banks can set their own interest rates, and 78 percent did not understand how the annual per centage rate on a credit card in creases the cost of what you buy. Sharon Radford, regional su pervisor of the Budget Counseling and Education Centers of North Carolina, sees eight to 10 students a month who have gotten into credit problems. She said that by then, it’s usually too late. “When students overload their credit cards and don’t pay it off, that stays on their credit history for seven years,” Radford said. "We need to help keep them from get ting in that situation.” The problem runs a lot deeper than students just getting in over their heads, Radford said. “When students default on these credit cards, it raises the per- Angel Tree gives to the less fortunate Stacey Ward Staff Reporter An “Angel Tree," presented by Lambda Chi Alpha, has been set up in Alamance Rotunda. From Nov, 16 until the end of classes, students and staff have the opportunity to choose an "angel.” Individuals from the Elon and Burl ington areas are in vited to par ticipate. The "Angel Tree,” in its third year, is a program where partici pants pick an “angel” card from the tree and buy a gift for that child. There arc gift suggestions on the card. The fraternity works with the Salvation Army in order to provide gifts for less fortunate children. Participants should put wrapped presents underneath the tree. Lambda Chi Alpha lakes all of the presents collected to the Salva tion Army. The gifts are distributed to the children on Christmas. “I think it’s a wonderful spirit of Elon College. Everyone’s chip ping in and getting into the spirit,” said Pete Peterson, Lambda Chi Alpha adviser. In 1992, Lambda Chi Alpha member Richard Campbell started the “Angel Tree” at Elon. The first year, the fraternity collected about 50 gifts. As the idea caught on the group ended up with hundreds of gifts, said Peterson. The “Angel Tree” has been on the master calendar since Au gust. However, most of the prepa ration took place about four weeks ago, said Lambda Chi Alpha Presi dent Whitney Newton. The fraternity expects a de cent response, because Newton said, people remember it from last year. “It creates the opportunity for Lambda Chi Alpha to recognized for its philanthropies. Also, it gives more Christmas spirit to people who otherwise wouldn’t have as much,” Newton said. CflBLEU15lOn A Tune Warner Cable Company rder in With Pay-Pcr-View inSHE ^ I Hi I !v •I t — !? fikA i ■ ^ ■ 'n THE Woody Harrelson, COWBOyWAY Kiefer Suihcrland. DECEMBER GUARDING TESS DECEMBER Shirley MacLaine, Nicolas Cage. r^-ti I Only $3.95 per movie! Call 584-1380 to order. Ready, Set, Let Yourself Go. vfHOV centage rates for all credit cardholders. Then, when these stu dents get older and try to buy a house, they get turned down for loans because of bad credit,” she said. Susswein said students are more likely to default than standard cardholders because of low income and little understanding of the re sponsibility behind spending. But the companies expect it, she said. So why would credit compa nies send students cards if they are not paying their bills? “What we hear, more often than not, is that parents are bailing their children out,” Susswein said. “The credit card companies know this. Some applications even ask for the parents’ names, even though they are not necessary.” Susswein is lobbying for tighter restrictions on how credit card companies target students. Last March, she testified before the House subcommittee on consumer credit on behalf of Bankcard Hold ers of America (BHA), a non-profit consumer advocacy group. Students’ mailboxes are flooded with letters from credit companies making these cards seem like the keys to freedom. A Citibank advertisement states “no need for a job or cosigner” and suggests using the credit card to pay for spring break in Florida. Credit card advertisements are posted in classrooms, put in stu dents’ bag when they buy books and inserted in with the college newspaper. These advertisements might not have as much of an impact if students were taught about credit cards in high school. Susswein also lobbied congress to start more edu cational programs. “No where in our school cur ricula are students required to learn about basic finance,” she told the House sub committee. “If our par ents don’t know or don’t teach us, we are expected to pick up this vital information hit or miss - and too often it’s miss.” Susswein discussed one case referred to BHA in which a student had accumulated more than $25,000 worth of debt on his creuj just in his freshman year. SJ he was still receiving more credit cards when he f ready delinquent on his Crawley understandsih lem firsthand. When he gn more than four years ago, accumulated more than $4 debt on three credit cardv his first credit card as a sopi when Alpha Sigma Alpha was offering pre-approva cards to college students as; raiser. He received a Discoi a Mastercard the next year mail. “I used the cards for fa maintenance and once for i ticket,” Crawley said, couldn’t pay it off every ra it built up.” After college his fint) television station did not pai so he had to continue living cards. Because of his expet Crawley feels students don credit cards. “If a student needs card,” he said. “It should bi through the parents and will ing higher than a $500 limii There is little chance industry self-regulating thou| College Credit Card Corp., ing marketer of credit cards dents, estimates that card i are earning $16.5 million ay every 100,000 student cardhc , more than $10 million of wl( interest income. Education is key to ni students more financially rq sible, Susswein said. “College students with no assets, no income, no crec tory, and no means of supp themselves are eligible for cured credit. And in some quite a bit of credit,” Susswet Radford believes in wh calls the “golden rule of cred students and anyone else credit card. “Never owe more than 3 cent of your income, or whi ^ can pay off in three months said. Spring Break Early Specials Bahamas Party Cruise 6 Days Including 12 Meals $279! Panama Cit]| 2 Oceanview Kitchens $129! Cancun and Jamaica $399! Daytona $15| Keys $299! CocoaBeach $159! 1-800-678-6386
Elon University Student Newspaper
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Dec. 1, 1994, edition 1
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