Charge it: College students rack up credit card debt

It was an appealing offer in the mail that enticed UW-River Falls sophomore Jake Grovum to get his first credit card.

The Visa, which was offered through his bank, promised the 19-year-old overdraft protection on his checking account.

“If I had $20 in my checking account and used my check card for something that was $25, the bank would charge the difference to my credit card,” he said. “It seemed like a pretty good deal at the time.”

Grovum said he usually pulls out his credit card to pay for clothing or when he is “unsure how much money I have in my checking account.”

But after accruing about $500 in debt, the sophomore is considering cutting his plastic in half.

“I just think credit cards allow you to buy things you obviously can’t afford and usually don’t need,” he said. “That’s a dangerous combination.”

At UWRF, Grovum’s experience is common.

Credit card ownership is the norm, rather than the exception, on campus.

Approximately 60 percent of students possess at least one, according to the 2006 results of the American Health Association National College Health Assessment.

The highest concentration of campus credit card debt falls between $500 and $999, which means Grovum’s deficit is not out of the ordinary.

Usually obtained for convenience or in case of financial emergency, students report that obtaining a credit card is particularly effortless.

A U.S. Department of Education study found almost half of all college students are inundated with credit card offers on a daily or weekly basis.

Bob Casey, branch manager of the WESTconsin Credit Union, said there are a couple of reasons why credit card companies are targeting this particular demographic.

“[Students] have a higher level of disposable income as a percentage of their total income,” he said.

This means after paying for rent, food and other necessities, college students have more money left over to spend on material items compared to other consumer populations.

Casey said it has been proven that students usually stay loyal to their original card, continuing to use it for many years.

“The first credit card a student gets is the one they keep the longest,” he said.

Even after obtaining two other credit cards, UWRF senior Jon Strande said he mainly uses the Discover he got at age 19.

The 22-year-old said he usually charges gas and cigarettes to the card, which has a balance of about $1,100.

“It’s nice to have,” he said. “You just gotta make sure you don’t spend beyond your means.”

Strande said he is “slowly” chipping away at his debt, normally paying more than the minimum amount due every month.

“It’ll probably be done by the time I’m done with school,” he said.

According to Casey, the danger comes when students accumulate so much debt that they are unable to pay it off.

“If a college student incurs too much credit card debt, they may be forced to make a decision between taking fewer credits and working more, or worse yet, leaving college so that they can afford to make the credit card payments,” he said.

Casey said a student’s credit rating, which is ascertained from their credit availability and whether they’ve paid their past bills on time, determines their financial future. Obtaining a job, renting an apartment and being approved for a home loan all depend on a decent credit score.

“This is the modern way of quantifying what a person’s character is,” he said.

At one point, UWRF senior Angela Hauge was about $1,700 in credit card debt.

Expenses for a friend’s wedding and a spring break plane ticket to Florida charged to her Visa contributed to the hefty balance.

“I think the more you use it, the easier it is to keep using it,” she said.

After working to pay off a large portion of the bill this summer, the 21-year-old only has a balance of $200 left.

But she said she learned a lesson about sensible credit card usage.

“I probably went a little overboard on mine,” Hauge said. “I could have been smarter with my cash on hand, which wouldn’t have made me use my credit card in the long run.”

Casey said he recommends students use credit cards, but to do so responsibly.

“It is important to learn how to use credit and to build a strong credit history,” he said. “Start small ... and pay the balance monthly. Use the card as a convenience, not a way to finance a higher standard of living.”