Drowning in debt

Armed with plastic in hand, college students across the country will be decking the halls of the shopping malls during the Christmas break. Students are shopping 'til they drop and charging themselves into credit card debt.

College students account for a little more than half the credit card holders in the country, according to the National Credit Research Foundation. The average college student has at least five credit cards, according to the NCRF.

SF State student Stacey Lasten is one such example. She has three credit cards, $3,800 in bills and she's only in her second year of college. She has no job and no way to make the payments due on the cards.

"I always believed getting a credit card would be hard. I never thought it would be that easy," Lasten said.

Lasten, 22, was on her way to class when a man at a credit card booth convinced her to fill out an application for a free gift.

Seven weeks later Lasten's Visa card came in the mail. She spent an easy $500 that afternoon, but it didn't stop there. The shopping continued. Before she knew it she had charged $1,000 on each of her three cards.

"I couldn't believe I'd charged so much stuff in such a short amount of time," Lasten said.

Fearful of what her parents would say, Lasten tried to get a job on campus to try and make payments on her out of control credit card bills.

The damage was already done. She was sent to a collections agency and her credit was badly damaged.

"I didn't realize what kind of trouble I was getting myself into by getting all those credit cards," she said.

At least once a month on college campuses across the country booths are set up advertising credit card applications. Students are aggressively recruited to apply for credit cards, regardless of income and enticed with free gifts and pre-approved applications.

The biggest issuers of credit to college students on campus credit drives are MasterCard, Visa and Discover according to the NCRF.

College students are targeted because they generally tend to be loyal customers and most hold on to those credit cards for longer periods of time, according to the Credit Manager's Association of California. For this reason, there is a huge amount of competition between credit card companies to be the first credit card in a student's wallet.

Approval of credit card applications are based on past credit histories and monthly incomes, according to Cyrus Bistkirk of the Consumer Action of the East Bay. With a monthly income of approximately $1,000 students can be approved for a credit card, he said.

Bill Strong of Credit Card Users of America said college students account for over $150 billion in spending during the school year.

In 1993, college students accounted for almost half of the $285 billion worth of credit card debt, according to the NCRF.

Leslie Trudell of CMACA said college students fall into the trap of using credit cards for everything when they are away at school because of the convenience.

Many students don't realize the responsibility of owning a credit card until it's too late. By then they are thousands of dollars in debt.

"When they use their credit cards and only pay the minimum payment due they don't realize late fees and finance charges really add up and in the end they pay more," Trudell said.

Computer science major Jennifer Claudell quickly found out how easy it is to fall into the credit trap.

At a campus booth she filled out five credit card applications in order to get five free gifts. She listed a monthly allowance on the credit card applications as her source of income.

"All of my friends had at least three credit cards so I thought I should have a few too," said 19-year-old Claudell. Six weeks later she had four of the five credit cards she had applied for.

Credit card companies make it too easy for students to get credit cards, according to Bistkirk.

"College students don't need co-signers anymore in order to get a credit card and sometimes they don't even need a job," Bistkirk said.

Claudell didn't realize the consequences of using four credit cards until it was too late.

"Having my own credit cards made me feel more independent, like I had my own spending money," she said. Her parents didn't allow her to work while she went to school so they sent her a monthly allowance, but it wasn't enough to cover all the credit card bills she acquired.

When she called them and told them she needed $3,000 to pay for purchases she made on her new credit cards, they suggested she get a job and settle her own credit card debts.

"When my parents didn't bail me out I was in shock. It's a lesson I'll never forget," she said.

English major Jason Bradford got the same message from his parents after he purchased $4,000 in clothes and stereo equipment with his new Visa and MasterCard.

Fortunately, Bradford was able to find a job right away and work out a payment schedule with his creditors.

"The guy at the table made it all sound so easy to get credit cards but he didn't tell me it was just as easy to fall behind in your bills and go into debt," he said.

[ Golden Gater Online November 30, 1995 ]

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