Magdalena Lopez avoids incurring debt at all costs.
The New Buffalo junior prefers using a debit card for just that reason.
Along with many Central Michigan University students, Lopez uses a card that withdraws money from her bank account directly rather than creating more bills for her to wade through later.
“I know how much money is there,” Lopez said of her debit card. “It’s easier to swipe and go. Credit is just another bill.”
Debit cards provide greater ease for Lopez and her peers to set better limits and spend wisely. Although credit cards can be helpful in taking out loans and allowing transactions to be adjusted before payment is received from a provider, they can leave students overwhelmed by larger bills and greater freedom to spend.
Lopez said she enjoys the use of overdraft protection alerts, which let her know when her balance is getting low. When her money runs out, the card will simply not work.
“You can get carried away with big expenses, so it’s good to have that protection,” Lopez said. “Growing up, my dad was in business and he always said to just avoid credit.”
She said credit will become more of a reality as she gets older, and is looking forward to building up her own credit within the next five years.
“(Credit) is not something you can avoid forever,” Lopez said. “You want to build that credit up eventually. My parents think I’m just going to swipe away, but if you’re careful, it can be pretty helpful.”
But to Mark Millard, a 19-year-old sophomore from Gaylord, credit cards can pose a danger when young people engage in frivolous spending and open up multiple cards and accounts to continue spending recklessly.
“I know a lot of people who take out way too much credit,” he said. “They spend way too much. My parents wouldn’t trust me, and I don’t blame them.”
Millard said he prefers his debit card for the easier transfers and because he doesn’t have to keep track of a credit score. He said the electronic payments make it easier to spend money, and he often spends more than if he used cash.
Just beginning her studies at CMU, Rochester freshman Danielle Blessing finds the debit card she began using a few weeks ago provides greater ease with instant withdrawals. However, she worries that credit cards might be too much for her to worry about as a student.
“Debit is easier,” she said. “When you need money, it’s instant. I might get a credit card in the future, but for now I don’t want to deal with bills. It’s too complicated while I’m in school.”
Rachel Schumaker also predicts credit will become important to her in the future and that a credit card is inevitable. The Hopkins freshman expects to build her credit score to be able to borrow from the banks when making large, necessary purchases.
“We will definitely need to take out loans for cars and houses in the future,” she said. “You’ve got to get some good credit, but you can get irresponsible.”
A recent survey from PR Newswire, a press release distribution service, estimated that one in four college students leave school with up to $5,000 in credit card debt.
An article released by CMU’s office of scholarships and financial aid cautions students about using money they don’t really have. The article found that building good credit is possible if students are careful and offers the following advice:
“Be careful with credit cards. If you don’t have the cash for a purchase, you probably can’t afford it. However, if you have a reasonable budget for personal expenditures and can pay off your credit card in full each month, you will be building good credit for your future.”