NJPIRG In The News

No student credit crunch

By CHRISTINE SPARTA
STAFF WRITER

It seems credit card offers are more plentiful than vending machines on college campuses and Rutgers is no exception.

The Cook/Douglass chapter of the New Jersey Public Interest Research Group on Thursday released a report on the effect of credit cards on college students.

"It's something as students we all think about," said Tatiana Smith, a Rutgers junior who is active with NJPIRG.

Smith, who got herself a Capital One card, was doing fine at first making about $20-$30 payments.

money's not there, I can't have it."

Bruce Mizrach, an associate professor of economics at Rutgers, does a random survey of his students and he's heard that 20 percent of students admit to carrying a credit-card balance. He suspects the percentage is much higher.

"Every student has a credit card and most have more than one," he said, adding that he's seen tables stationed at the student center at the start of each semester with people promoting credit cards.

And Mizrach doesn't necessarily find it to be a bad thing.

"In many cases, this is the only form of credit students can get," he said, adding that he's seen students be savvy enough to find the lowest rate and jump to a different card at the prospect if a lower one is offered.

Smith said she was solicited by mail at her on campus post office box.

Rutgers student Estee Atzbi, who is majoring in political science, said she's seen people marketing credit cards to students by the grease trucks on College Avenue. They offered a free fat sandwich to people who sign up, something she thought would be a great lure for the male students on campus.

"They'll do anything. Win prizes and sell your soul away," said Atzbi, 20.

According to the survey, promotional gifts are pretty common and T-shirts top the list.

In some cases, credit card companies will offer fees as a fundraiser for student group.

"This method is a particularly insidious marketing tool in that it relies on peer pressure to ensure that students are filling out applications for the credit card," the report said.

Mizrach has seen consumer debt grow while he's seen a negative savings rate in the United States.

"I think (students) grew up in a world in which the use of credit cards and debt are part of their lives. They'll purchase their first car on credit and probably purchase their first house on credit," he said.

He pointed to legitimate life setbacks such as getting sick or losing a job that could plunge people into debt.

He admitted that he personally charges everything from gas to groceries on plastic, but is good at paying the balance.

Perhaps the best advice to students came in a whimsical way.

At the NJPIRG event, there was a black plastic top hat filled with lollipops that said, "Don't be a sucker."

Christine Sparta can

be reached at (732) 565-7270

or csparta@gannett.com.

The self-proclaimed "no hassle" card wasn't exactly that for Smith.

She got caught up in finals freshman year and said she missed a payment or two.

"I tried to catch it up, but not as soon as they liked," she said.

To make matters worse, she had to take a semester off because she was hit by a car while on campus.

Her $350 balance spiraled to $1,000 because of the interest.

Smith said the matter was sent to a collection agency and then a law firm.

"They were never nasty," she said. She tried to negotiate an affordable payment plan, but she said they wanted $300 outright.

Smith said the items on the card were things like textbooks and some clothing. "I wasn't going nuts buying at the MAC (cosmetics) counter," said Smith, 20.

She is still paying off the debt and, with the aid of her parents' lawyer, she now sends in an affordable $50 a payment.

Smith, who lives in Edison, earns $8.50 an hour at a clothing store and has other expenses besides the credit card debt like a $200 monthly phone bill.

According to the U.S. PIRG Education Fund report, college juniors like Smith who were surveyed carried $2,459 on their credit card balances. Seniors were slightly higher at $2,623.

The survey included students from a number of colleges across the country including Rutgers.

One in four of those polled reported they paid at least one late fee and 15 percent paid at least one over the limit fee.

Now, a debit card is the only plastic Smith uses.

Her new fiscal motto: "If the money's not there, I can't have it."

Bruce Mizrach, an associate professor of economics at Rutgers, does a random survey of his students and he's heard that 20 percent of students admit to carrying a credit card balance. He suspects the percentage is much higher.

"Every student has a credit card and most have more than one," he said, adding that he's seen tables stationed at the student center at the start of each semester with people promoting credit cards.

And Mizrach doesn't necessarily find it to be a bad thing.

"In many cases, this is the only form of credit students can get," he said, adding that he's seen students be savvy enough to find the lowest rate and jump to a different card at the prospect if a lower one is offered.

Smith said she was solicited by mail at her on campus post office box.

Rutgers student Estee Atzbi, who is majoring in political science, said she's seen people marketing credit cards to students by the grease trucks on College Avenue. They offered a free fat sandwich to people who sign up, something she thought would be a great lure for the male students on campus.

"They'll do anything. Win prizes and sell your soul away," said Atzbi, 20.

According to the survey, promotional gifts are pretty common and T-shirts top the list.

In some cases, credit card companies will offer fees as a fundraiser for student groups.

"This method is a particularly insidious marketing tool in that it relies on peer pressure to ensure that students are filling out applications for the credit card," the report said.

Mizrach has seen consumer debt grow while he's seen a negative savings rate in the United States.

"I think (students) grew up in a world in which the use of credit cards and debt are part of their lives. They'll purchase their first car on credit and probably purchase their first house on credit," he said.

He pointed to legitimate life set backs like getting sick or losing a job that could plunge people into debt.

He admitted that he personally charges everything from gas to groceries on plastic, but is good at paying the balance.

Perhaps the best advice to students came in a whimsical way.

At the NJPIRG event, there was a black plastic top hat filled with lollipops that said, "Don't be a sucker."