PART TWO OF A FIVE-PART SERIES
Junior Julie Biddle said she pays all of her credit card bills on time. Her sister, on the other hand, said she avoids paying her bills. Don't think 25-year-old Jorie Thornton doesn't have bills, because she has plenty. She just chooses not to pay them, and she screens her phone calls to avoid the creditors, Biddle said. She doesn't have the money and feels that because she's not planning on buying a house and won't need a major loan anytime soon there's no need to pay off her debt, she said.
Biddle calls her sister a "flower child" because Thornton is a stereotypical artist type with her head in the clouds. She doesn't follow many of society's norms, such as paying taxes. She works as an artist so she gets paid only in cash, Thornton said.
Although an extreme case, Thornton is not unlike many college students who struggle with their finances and run into debt problems when using credit cards or taking out loans.
Some students simply try to avoid the whole problem by not owning credit cards.
Student Government Association President-Elect Betsy Mills said she is deathly afraid of credit cards and only uses a debit card. She wants to avoid the curse of those plastic banks and the temptation to spend more and more, she said. With debit cards she can't spend money she doesn't have, Mills said.
Junior Ben Snipes said he also uses only a debit card. For the most part, he's had no problems living life without credit cards. A few times he's been at a restaurant or a grocery store and come to find out his checking account was empty, he said. But by borrowing cash from a friend or making a quick trip to the ATM to transfer money from his savings account, Snipes said he hasn't yet faced any dire consequences.
BENEFITS OF CREDIT CARDS
Charlotte Everett, manager of Muncie Federal Credit Union, said having a debit card does not do much to build up good credit.
Credit is a factor in getting loans, a job, a place to live and insurance. Because of the importance of having good credit, Everett said she recommends students get a credit card to prove to creditors that they are reliable customers when it comes to taking and paying off loans.
If students are worried, Everett said they should get credit cards with a small limit of about $500, so students make sure they don't spend beyond their means.
WHAT TO LOOK FOR IN A CREDIT CARD
Everett said the more students prove they can reliably pay off debt, the more options they will have when they need to borrow money for a car or house. If students have trouble getting a credit card from a major bank, they can start smaller with credit cards from department stores, gas companies or credit unions, she said.
Students need to shop around and look for cards with a low Annual Percentage Rate and interest rate, Everett said.
TO HAVE A BALANCE OR NOT
The interest rate comes into effect when students can't pay off their entire monthly bill or balance. Students receive no financial benefit from keeping a balance on a card, but paying off balances over a period of time shows creditors students can be relied upon to make regular payments, said Teala Shidler, senior retail officer at Star Financial Bank. If large credit card debt is being paid off in full each month, it might signify that a parent is simply making all payments for a student, Shidler said. Students, however, are best off paying credit card debt in full each month whenever possible, she said.
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