Trishula Patel | Taking charge and getting credit

Remember when you’d open your mail box, excited to be receiving anything, ­­only to be disappointed by yet another credit card offer? These spam-like letters arrived from all sorts of places, from department stores to gas companies. Most stores still offer every customer the opportunity to register for a store benefits credit card. And when I opened my first bank account just over a year ago, a credit card arrived in the mail despite the fact that I hadn’t applied for one.

It was a world where credit was handed out like flyers on Locust Walk — generously, and with abandon, to the point of being obnoxious. For many college students, this opened up opportunities and promoted a culture of spending. But as the recent credit collapse has shown us, beyond the fine print (which often targets young adults inexperienced with such matters) lurks the potential for financial ruin.

Credit is now a precious commodity, especially for college-age students. At the end of May, the Senate voted overwhelmingly to put new restrictions on the credit card industry. One such restriction prevents those under 21 from obtaining a credit card without a cosigner. But even before the bill passed, many banks (including my own, Key Bank) no longer accepted underage cardholders in light of the economic crisis.

While many find all of this frustrating, it is actually for the best. Look at it as just another reason to look forward to turning 21. And in the meantime, we can be resourceful in finding new ways to establish credit.

According to White House statistics, credit card debt has increased by 25 percent in the last decade. It seems only reasonable to restrict credit card access for those under the age of 21, a large portion of whom are still in school and do not receive a stable income. With student loans to pay off the minute we graduate, the last thing we need is more debt.

As College sophomore Christian Albornoz, put it, “The problem with credit cards in college is that kids have so much on their minds that it takes a certain type of person to keep up with payments and not rack up a lot of debt.” He added that “this is where the … credit card companies come in and add on these little fees — over the limit, late payment, replacement and transaction fees for cash advances — that we forget about. And when monthly payments aren’t paid back in full, debt can go crazy high.”

And this is a large part of the reason that the nation is facing a credit crisis in the first place. Even those of us who never took Econ 001 can see that much of the collapse stemmed from people reneging on their debts. Banks handed out mortgages and credit cards indiscriminately, often to those who could not realistically afford to pay them back.

As college students, words like “mortgage”, “credit score” and “late fee” have yet to enter our lexicon. And we like to think that such things do not affect us — that our Penn bubble is impervious to the real world. But, in truth, the credit crisis is affecting us now, even before we graduate. And the pitfalls of owning a credit card hardly discriminate.

It is impossible to ignore the facts: Americans pay $15 billion in penalty fees each year, and those carrying credit card debt pay more than 20 percent in interest. Most 18-year-olds are hardly in a position to have this sort of debt on their shoulders.

We should be thinking about the future, and taking into consideration how we’re going to pay off all our debts once this four-year bubble finally bursts. And as we do this, there are other ways to practice fiscal responsibility that can benefit us in the future.

It is, in fact, possible to establish credit history without owning a credit card ­— like paying your own cell phone or rent bill every month from your own bank account. By the time you graduate, you should have established a good enough credit history that it won’t be a problem when you’re trying to make your first big purchase.

So make that trip to one of the growing number of banks on campus to open your own checking account and stop relying on Dad’s credit card. Planning a trip to Costa Rica? Make saving up for that vacation in advance part of those plans. A summer job should do the trick.

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