Skip to Content, Navigation, or Footer.
Support the IDS in College Media Madness! Donate here March 24 - April 8.
Friday, March 29
The Indiana Daily Student

Avoiding debt: easy in theory, tough in practice

Credit card companies love customers like junior Keely Tober. She enjoys shopping and never carries cash.\nWhen she turned 18 last year, Tober saw her birthday as her chance to finally apply for a credit card, and it was the first thing she did that day.\nShe now owns seven credit cards, including four store credit cards, and has mounted significant debt. \n"I impulse-buy a lot without thinking about it," Tober said. "I don't think about it as real money."\nHer spending habits have led to her maxing out two cards and accumulating large balances on four others. Her highest balance is about $900. She does not have a card with an annual percentage rate -- the amount of interest on her expenses with the card -- below 18 percent.\nBut while Tober spends freely, she says she makes her payments on time and continues to maintain good credit. Still, she has had to make sacrifices to get things under control. This summer she worked two jobs and close to 70 hours a week to pay her bills.\nIn order to avoid a situation like Tober's, students should live within their means, said Nan Morrow, IU Credit Union vice president of marketing.\nBuying what is affordable, paying off monthly balances and carrying few credit cards are some suggestions Morrow gives students.\nGetting a card with a low APR and avoiding late fees will ensure good credit, she said. When applying for a credit card, students should be sure to compare any information the company provides about its monthly and annual fees and APRs.\nSenior David Bowman uses his card in line with Morrow's thinking. He is careful to watch his credit balance and pays more than the minimum payment each month. \nSince his freshman year in college, Bowman has had a total of three cards. He has paid off and canceled two.\n"I think credit cards are a scam," Bowman said. "College students don't realize that getting into credit card debt can ruin your chances to own assets." \nBowman said he is confident that he has established good credit. He checks his credit through Equifax. Although he has not checked his credit report lately, he said his credit rating is still in good shape because he has always kept his credit cards under control.\nBut responsible money management should not be restricted solely to credit cards. Many young people, particularly those who pay for their education with student loans, come out of college owing large amounts of money.\nIn the fall of 2000, according to IU's most current information, 7.2 percent of students received loans from the University.\nTerrell Cooper, a junior, has taken out loans the past three semesters in order to stay in school. He qualifies for both subsidized and unsubsidized loans. In the case of subsidized loans, the government pays the interest rate on the loan until six months after graduation, at which point the student picks up the payment.\nBut Cooper remains determined to avoid any additional debt. He follows the advice of his mother.\n"Credit cards aren't what they seem," Cooper said. "They get people in trouble, and I don't feel that I need to have one."\nIn the case of the IU Credit Union's student Visa program, Cooper is right. For many years IU gave its students Visa cards but got rid of the program because too many students maxed out their cards and were not paying their balances. The limits for the credit card were based on the student's registered year of school. Freshmen received less than sophomores, sophomores less than juniors and so on. The organization of the program was likely the problem, Morrow said.\nThe current way is working better for the IU Credit Union. Students are still able to get credit cards through the credit union, but they are required to follow the same qualifications as non-students. The qualifications consist of a co-signer and a steady income.

Get stories like this in your inbox
Subscribe