Be Smart About Credit Cards

The TV program guests told appalling stories. "I owe more than $26,000 on my credit cards," one said defiantly. Another, confessing that he liked to treat friends to expensive dinners out, admitted, "I've trashed my credit rating." And another, insisting she could manage her bills, said she had charged a staggering $50,000 on 11 different credit cards.

And the biggest jolt of all? These guests on TV's Oprah show all were college students in their late teens and early 20s. Two of them already had declared bankruptcy.

Many of the student guests said they'd first gotten a credit card at the sign-up tables at college registration areas. One young man, a student who'd worked registration as a recruiter for a national card company, said, "[students] are the bait, and we're the sharks." He explained that he earned points for each student he signed up.

All the participants said they'd learned some hard facts about using credit cards:

  • Be realistic about your expenditures. If you're covering routine expenses with credit, you're living beyond your means.
  • Understand the trap of minimum monthly payments. If you make a minimum payment--say the lesser of 2% of the balance or $25--on a $2,000 credit card balance, paying 18% interest, you won't pay off the balance for nearly 16 years, and you'll pay $3,328 in interest charges.
  • If you can't keep up with one credit card, it's foolhardy to add more. More cards do not mean more money coming in--they mean more going out, and for a much longer time.
  • If you're in credit trouble now, call 800-388-2227 to find a nonprofit affiliate of the National Foundation for Consumer Credit. This organization helps debtors get a handle on their bills and repair their credit while also meeting their obligations.

When you and your parents agree that you're ready to handle a credit card, talk to Ashland Credit Union at 800.245-8112. Our credit card carries a low interest rate and a credit limit that gives you the convenience you need without putting you in a lifetime of credit jeopardy.