How much debt has college tuition put you in?

travman23 · 02-02-2007, 01:13 PM

Ok here's 1 thing I've never quite got is why people allow themselves to get into a bunch of credit card debt. The rates are rediculous so why do people allow themselves to keep putting debt on them rather than taking out some other kind of line of credit like a small personal loan or something where the rate is more managable? Maybe someone that has been in this position can explain this to me better.

I guess I've never quite caught onto why you just don't pay off your CC bill every month and if you don't have the money to cover your CC bill then don't spend the money in the first place. I know people that get themselves so far into CC debt they probably wind up paying for things they bought with it 3-4 times over by the time they get it paid off.

Another pet peeve of mine is people that leave a bunch of money sitting in a low-interest checking account where it earns next to nothing for interest instead of a money market savings account like ING that earns 4.5% interest and you can transfer money back in forth easily online when you need it. Heck, if you want a free $25 just for signing up for an account just send me a PM with your email address and I'll send you a referal link to sign up with ING. I'm all for sharing the wealth with Cyclone fans, especially free money :)

scubapohl1 · 02-02-2007, 01:20 PM

Boy, I couldn't agree more on the credit card debt!

In retrospect,

I guess if I were 18-20 again and had a choice between a $200 cash advance for beer and debauchery and a interest payment at a later date, I'd be a victim of the 29% crooks at Visa too.

travman23 · 02-02-2007, 01:30 PM

One of my business professor's had a whole lecture on the evils of credit card debt. I was never tempted to fall into that trap to begin with but I'm sure she opened some eyes up that day. I think she had one of the best ideas I've heard of which was legislation that banned credit card companies from sending credit card offers in the mail or phone solicitation to college students. Makes sense because most college students have limited income or assets and mostly likely are already in debt with student loans. Although for some reason you seem to become more "qualified" for lines of credit once you take out large loans which I have never quite understood. I get way more solicitation for loans and credit cards now that I have a mortgage than I did before it which doesn't make much sense why now that you have money committed to that loan that means you should be able to take on more debt?

DaddyMac · 02-02-2007, 01:39 PM

You're right in regards to the debt. For somebody working, 25 or 30, you're dead on .

But you have to remember the position of the kids when they do this to themselves. These cards are targeted at them and other loan options are rarely available. And to be honest, your average college student isn't especially savy in regards to managing money and credit, especially when you have little of the first, and alot of the second. I know I wasn't then and still screw plenty of stuff up at 35.

I'm similar to you. I like to think I play the credit card game quite well. Everything, and I mean EVERYTHING goes on our credit cards. Don't use a debit card and I write maybe 10 checks a year. Heck, every now and then I try to get my mortgage charged. But I never carry a balance.

So get one of those cash back ones and throw everything you can on it. But a person has to be disciplined. Do that, and you'll actually make a few hundred dollars a year, if not more.

CyForPresident · 02-02-2007, 01:39 PM

My recommendation to all those young parents out there. Start an Iowa College Savings 529 plan for your kids. Put whatever you can afford in that. Plus, it is tax deductible in Iowa and most other states, and the money is tax free when you take it out for college. It's better than savings accounts or bonds. You can even do it if you don't live in Iowa.

Thats what my parents did for my sister and me. Wow am I thankful for it. My parents have lived well below their means their entire life and saved and saved so they could send both of us to ISU. My sister graduated in 2005 and had no debt for 5 years at ISU. I will graduate in 2009 and unless the fund runs out (getting down to the bottom of the barrel, 16,000 for two years is all I have left) I will graduate with little to no debt. Thank you mom and dad.

CyGal · 02-02-2007, 01:39 PM

I graduated in '03 (2 yrs DMAAC, 2 yrs ISU) with a total of $3500 in student loans. Paid only $1000 out of pocket, and only a $500 scholarship from DMACC. Thank you to my grandpa's spinster sister! She made my education possible!

I also had a MIS teacher who had an interesting theory on credit cards. He buys cars on his cards, and gets cash back bonuses. Pretty nice when you spend $40K on a car. However, he apparently did well in the stock market, and had the cash to pay for the car to begin with, just liked the cash back bonus. Can't blame him. If I had that kind of money, I'd do that too!

DaddyMac · 02-02-2007, 01:43 PM

Originally Posted by travman23

I get way more solicitation for loans and credit cards now that I have a mortgage than I did before it which doesn't make much sense why now that you have money committed to that loan that means you should be able to take on more debt?

Actually, it makes perfect sense.

Credit, and credit worthiness, is kind of like that evil blob from the 50's horror movies. It just grows and grows and grows. But only if you stay in good standing. Every creditor out there wants a piece of the pie.

You got a major loan, so it would seem you're a good risk. You didn't qualify simply for your good looks.

Miss a couple payments or default on that loan, you'll see a serious reduction in solitiations

clones_jer · 02-02-2007, 01:49 PM

I ended up paying my last years worth of rent on a credit card, I was broke,broke,broke, and it was what had to happen. Credit cards can be much better than lines of credit, i.e. I have 3 cards now at 12.9%, 11.9% and my main one locked at 7.9% for the life of the card. I also have a line of credit through a reputible bank I've been using for 10 years - they charge 21% - I only use it as checking account overdraft protection.

Personal loans are generally not a good deal unless you take out a large sum (10,000 or more) - for smaller amounts they also have very high APRs %'s - and you have to remember these are college students with limited credit history and its not like a lot of banks want to back them with quality loans.

Credit was a necessity for me and I've been as high as $18K into them - over a five year period I've hit zero - and then bouced up to about $2K for various reasons.

Credit cards when managed with upmost care can be helpful - what I would want changed is how easily they can raise your rates - changing a 3.9% APR to 24.9% because you were days late on a payment is criminal.

travman23 · 02-02-2007, 01:50 PM

They have a do not call list, wonder if there is a do not mail list? I found this: https://www.directmail.com/directory/mail_preference/ but am leery if that really would work.

Anyone have any good stories on how they have cut down on junk mail solicitations? I sometimes like to stuff my credit card bill I send back with the crap they put in with my bill just to annoy whoever has to open the payment up to process it as it annoys me to get that crap when I go to open my bill.

ISUCY11 · 02-02-2007, 01:55 PM

I've got a year left and about 16k so far.

DaddyMac · 02-02-2007, 02:06 PM

Originally Posted by clones_jer

Credit cards when managed with upmost care can be helpful - what I would want changed is how easily they can raise your rates - changing a 3.9% APR to 24.9% because you were days late on a payment is criminal.

Alot of people don't realize that credit card companies will often REDUCE your rate, just as easily as they raise them. I always hold on to a few different cards (supposedly having a whole slew of cards can adversely affect your credit rating) and maybe every six months I'll call the customer service lines and play a little hold 'em with them.

And for your example, the mere mention that you'll just move your business will often be all it takes to keep your rate down after minor indescretions. Customer service agents have a fair bit more power to affect change than they will let on.

Remember, they don't know what rate you're getting with other cards. So a little bluffing with "well I can get this rate here" can get you a long way. Amazing when you have a long history of purchases and they're making money with every transaction you make, how fast they'll accomodate you. And also remember, as a general rule the credit cards DON'T make money off your interest, but rather off the transaction fees they charge retailers. You being their customer instead of Credit Card X is in their best interest. Of course, that's not to say they won't let the average consumer be stupid and take them for all they can.

clones_jer · 02-02-2007, 02:09 PM

Originally Posted by DaddyMac

Alot of people don't realize that credit card companies will often REDUCE your rate, just as easily as they raise them. I always hold on to a few different cards (supposedly having a whole slew of cards can adversely affect your credit rating) and maybe every six months I'll call the customer service lines and play a little hold 'em with them.
.

You're right, I like to call my cards about every 6 months, the bare minimum they will do is increase your credit line - which will help your credit score.

I usually succeed in lowering my rate a couple percent

DaddyMac · 02-02-2007, 02:15 PM

Originally Posted by clones_jer

... the bare minimum they will do is increase your credit line - which will help your credit score.

I don't know the math on this one, or even completely understand the logic, but having too much credit available can adversely affect your score. It has something to do with the ratio of income versus available debt (not actual debt). So if you're making 50K/yr and have $51K in available credit, well that wouldn't be good.

You're very much right however, having a healthy amount of available credit shows you as a good risk, but it does turn at some point. I have no idea where that curve lies. But I imagine it's a pretty lofty amount.

CyGal · 02-02-2007, 02:25 PM

I called one of my cards to try to reduce the rate. When I started it was a fixed 12.9% interest rate, but has since switched to variable, after a company buy out, and it's running about 22% right about now. They flat out refused to do anything. Said they didn't have any offers to give, so they couldn't reduce it. Thing is, I've been with this company since '97 or '98, and that's how they treat me? I've never been late with a payment, typcially pay more than the minimum, and run enough of a balance that they should be making nice money off my interest payments, and they wouldn't do jack for me.

DaddyMac · 02-02-2007, 02:31 PM

That really surprises me. But I'd say that's all you need to know. Might I inquire as to what company?

I've held a Citi rewards card for years and have had no problems and they're usually very good to deal with. The only problem I had was they limit the rewards to $200 a year, which I hit in May last year. So I started using a Chase rewards card that supposedly has no limits. Both offer as a general rule 1% back. I know airlines cards and such offer better rates depending where you spend. But I prefer just getting the money back. Discover doesn't always pay a bonus, kind of random how they do it. But for the past year or so they have 3 month promotions on 5% cash back. Right now I think it's Airlines, car rental and hotel stays. But last fall it was online purchases including Amazon.com - made a nice little bank on that on.

If that's the way they treat you when things are good, bail. What's going to happen if (God forbid) you really need something from them?