The holidays are just around the corner, and all those extra expenses can start adding up.
Before you can say “finals,” Thanksgiving, Christmas, Kwanzaa and Chanukah will come into sight with big price tags attached. And let’s not forget to ring in the New Year’s with style in a new party outfit.
Faryal Zahoor, a senior in biological sciences, said that although it is more difficult to conserve money during the holidays, she has found ways to deal with it.
“I know that I will be spending a lot during a certain time, so therefore I start saving up way in advance,” Zahoor said. “It is all about saving. If you can cut corners beforehand, you will have more than you think you have.”
Zahoor said one way she “cuts corners” is by imagining that she has spent more than she really has.
“When I buy something and it’s $23.69, in my mind, I think I’ve spent $25,” she said. “Toward the end, I might think I spent $100 and I only spent $75 because I round up.”
One key problems students face when it comes to holiday spending is confusing need with want, according to Zahoor.
“People usually get those mixed up,” she said. “I only spend on what I need, not what I want.”
While Zahoor said she does not have a personal credit card, many students have one, if not more, types of plastic to their names.
According to Pam Gerace, director of Student Legal Services, students often have upward of four credit cards and an average of $5,000 to $7,000 in debt before they go to Student Legal Services for help.
“Usually they’ve stopped paying by the time they come into my office. They’re usually throwing away statements, and it has been months,” she said. “They’re tired of dodging telephone calls, or they’re tired of the letters and their roommates getting on them for the credit calls.”
Students who have credit problems are usually being charged finance and overdraft fees, according to Gerace.
“It’s not unusual that I will have some students that come in that they are having $100 a month added just for fees,” she said. “Anywhere between 5 to 7 percent of our case load is going to be students having credit problems.”
Accumulating fees may cause students to go over their credit limit, leading to even more fees, according to Gerace.
“When you go over the amount of your credit limit, just because they’re adding so many fees a month, that means another fee,” she said.
One contributing factor to student debt is simply how easy it is to get acredit card, Gerace said.
“I don’t think the banks really do give credit based on the ability to pay or income,” Gerace said. “They do it just because you’re a college student.”
The more a student uses his credit card, the higher the credit limit goes, according to Gerace.
“It doesn’t necessarily mean you can pay more than that,” she said. “It adds up, $2,000 on this card, $3,000 on that card; it just keeps getting bigger and bigger,” she said.
However, according to Gerace, most of the students who go to Student Legal Services do not have to declare bankruptcy, and there is a process for dealing with credit card debt.
“First of all we do a reality check,” she said. “We need to know all of their debt. We try to make a list of everything, all the different credit cards that are outstanding.
The second step is to make sure how much that student owes.
“If the student hasn’t gotten a statement in six months, [their debt] could have gone up substantially,” she said.
The third step is to make sure the student makes consistent monthly payments according to their ability to pay.
“We would actually tell the student to make the payments through our office because we don’t want the credit card companies to have [the student’s] checking account number,” she said. “Secondly, it helps us keep track every month that payments are being made.”
Another option students may have is to try to settle their debt, according to Gerace.
“We may be able to negotiate the debt down to 70 cents on the dollar, so that it gets marked that it’s no longer owing, which helps [the students’] credit rating,” she said. “When the economy is tight like it is now, [creditors] negotiate a whole lot less.”
On the bright side however, if a students uses their credit card appropriately, making at least the minimum monthly payment and not requesting a cash advance, these fees can be avoided.
Christina Garner, a sophomore is biological sciences, said she would not get a credit card because of the debt risk.
“I have loans but that’s for school, and over the summer I have a job so I try to save for the school year,” she said. “There should be lower interest rates for students, or they should have a co-signer.”
Chantal Sanders, a junior in biological sciences, said students should not take a credit card just because they are easy to get.
“A credit card is a lot of responsibility,” she said. “You can’t just go out and spend without knowing how much money you have in your account or how much money you are willing to pay,” she said.
