Students struggle with credit card debt

by Grayson Steinberg

Bethany Ramsdell racked up $10,000 in debt on her credit cards over five years, regularly shopping at stores like Nordstrom and Victoria's Secret.

Ramsdell, a psychology senior, said credit card company marketing efforts at booths on campus helped entice her to get six credit cards.

"If they weren't there, I wouldn't have gone out of my way to sign up for [the cards]," she said.

Financial institutions market heavily to students like Ramsdell to win the future loyalty of customers with high-earning potential, said Tracy Clark, associate director for the JPMorgan Chase Economic Outlook Center at ASU.

"They realize that eventually college students are going to get good jobs," Clark said. "They want to build some familiarity now instead of waiting until it's too late."

Companies market to students by giving out free promotional items on campus and offering incentives for signing up, such as free points toward purchases, he said.

Universities can do little to prevent this, he added.

"Even if the University were to impose really strict guidelines, there's nothing you can do if they're five feet off campus," Clark said.

ASU allows any vendor to sell products on campus as long as the marketing is done in conjunction with a student organization, said Brett Perozzi, executive director of the Memorial Union.

While building bonds with potential future customers is important to credit card companies, college students aren't their biggest target audience, said Tracey Mills, a spokeswoman for the American Bankers Association.

Financial institutions market credit cards to baby boomers most often because of the increased likelihood they will pay their bills, Mills said.

"Most baby boomers have strong credit histories, and they have more assets," she said.

Marketing campaigns also don't often influence whether students spend money, Mills added.

"They're old enough to make decisions about their finances," she said. "The vast majority of college students manage their credit wisely."

Nursing sophomore Ashley Spencer keeps track of her finances weekly by writing down how much she spent and where.

She also has only a $200 balance on her Visa credit card.

"If I don't think I really need it, I won't buy it," Spencer said.

There's also evidence that other college students continue building up credit card debt, but at a lower rate than in the past, according to Nellie Mae, a major student loan provider and debt management firm.

By 2004, the average outstanding undergraduate credit card balance fell to about $2,200 from $2,700 in 2000.

Students get into trouble with credit cards because they often have inconsistent sources of income and use the cards for times when they have little money coming in, Clark said.

They also tend to lose track of how much they spend, he added.

"If you're standing there looking at this really cool piece of electronics and all you have to do is flip out the credit card, you have to say, 'Gee, it's not really worth it,'" Clark said.

Ramsdell said she regrets collecting as much debt as she did and has closed all her credit card accounts.

She has also consolidated all her debt and got it reduced to about $5,500, which she has to repay over the next two years.

"If I had paid along the way, I wouldn't have to worry about it," Ramsdell said.