Report: Students using high-interest credit cards to finance education
Scott Travis and Missy Diaz, Sun Sentinel
Issue date: 4/15/09 Section: News
"It's just the ease and convenience of it all," he said. "People can pay at 4 in the morning."
Several student credit cards have interest rates of 14.99 percent for those with good credit, according to the Web site bankrate.com. Federal Stafford loans have interest rates of 6.8 percent. Private school loan rates average about 8 percent, according to bankrate.com.
O'Malley said students and families may be underestimating college costs and are using credit cards to fill the gaps.
Using a credit card may be the only way for some to continue a college education in this tempestuous economy.
"I think what's happened is since the economic meltdown eight months ago, families are strapped and they don't want their child's education interrupted, so I think a lot of families may be using their child's credit card," said Bill Hardekopf of LowCards.com, a consumer resource on credit cards. He cautioned that students and parents need to be aware of their card limits to avoid over-limit fees, which can be $30 per transaction.
The report found 60 percent of students surveyed were surprised at their high balances, and 40 percent said they charged items knowing they didn't have money to pay the bill.
About 17 percent said they regularly paid off all cards each month, and another 1 percent had family members paying the bill. The remaining 82 percent carried balances, incurring high monthly finance charges.
___
(c) 2009, Sun Sentinel.
Several student credit cards have interest rates of 14.99 percent for those with good credit, according to the Web site bankrate.com. Federal Stafford loans have interest rates of 6.8 percent. Private school loan rates average about 8 percent, according to bankrate.com.
O'Malley said students and families may be underestimating college costs and are using credit cards to fill the gaps.
Using a credit card may be the only way for some to continue a college education in this tempestuous economy.
"I think what's happened is since the economic meltdown eight months ago, families are strapped and they don't want their child's education interrupted, so I think a lot of families may be using their child's credit card," said Bill Hardekopf of LowCards.com, a consumer resource on credit cards. He cautioned that students and parents need to be aware of their card limits to avoid over-limit fees, which can be $30 per transaction.
The report found 60 percent of students surveyed were surprised at their high balances, and 40 percent said they charged items knowing they didn't have money to pay the bill.
About 17 percent said they regularly paid off all cards each month, and another 1 percent had family members paying the bill. The remaining 82 percent carried balances, incurring high monthly finance charges.
___
(c) 2009, Sun Sentinel.
Be the first to comment on this story