Spending Credit Wisely

Setting foot on any college campus could likely mean being approached by an overly ecstatic, clipboard-wielding individual offering some sort of free gift in return for a social security number and school address.

Undoubtedly, they have with them a pile of T-shirts bearing some sort of vernacular phrasing, a large assortment of battery-operated lighting devices and several potbellied teddy bears dressed in school colors.

“Credit card companies are making a concerted effort to get students hooked on debt,” Quicken.com warns. “In fact, chances are more likely that they’ll be applying for a credit card rather than a spot in Economics 101.”

This gives a new ring to the phrase “college credit.”While responsible use of a credit card can be the first step toward building a solid credit history, the majority of today’s students are finding it hard to exercise restraint in spending.

“I can still remember how happy I was to get my first credit card,” said Sarah Phelps, a recent USF graduate. “Once I got it, it was even easier to get more of them.”

“I guess I went a little overboard paying for groceries, clothes, gas, long-distance phone bills to my boyfriend,” she admitted, rolling her eyes while counting the expenditures on her fingers. “I have no idea how long it’s going to take me to pay the balances.Phelps is one of millions of college students who found getting into debt a little too easy.

“Our largest group of consumers who come in for credit management are in school or just graduating,” said Richard Schram, special projects manager at Consumer Credit Counseling Services of Central Florida.

The counseling agency, one of several available nationwide, works with creditors to create a payment plan that fits into a strict – and plausible – budget.

Credit card vendors typically woo freshman with a starting credit limit of $500, Schram said. Before too long, the student tops that limit, and credit card companies extend it, sinking them deeper into debt.

But Schram and his associates said debt is easily avoided. It’s just a matter of holding back and planning ahead.

Quicken, a company known for its user-friendly tax preparation software, offers a debt-reduction manager on its Web site, . While it wasn’t necessarily designed with the typical student in mind, much of its content can be useful for the budding budgeteer.

For example, the company offers a quiz listing word problems that test money management skills. Here’s one:

You buy a stereo for $650 and charge it to your credit card that has an annual percentage rate of 19.85 and a periodic interest rate of 1.65 percent. You pay $21.45 per month. How much will you pay in interest by the time your bill is paid?

The answer, surprisingly enough, is $237.44. That’s $887.44 total.

Change the monthly payment to $60, and the interest charges fall to $59.14.

Don’t expect to learn that from the happy clipboard bearer.

Having a credit card can be a major convenience for college students who are on their own for the first time but can create problems that take years and thousands of dollars to fix.

According to a Visa survey, the average undergraduate left college in 2000 with more than $2,000 in credit card debt.

A handful of survey-takers attributed some of this debt to unexpected necessities such as auto repair or emergency medical bills

Too many, however, see it as an unpleasant reminder of a few extremely expensive pizzas.