Beware of "harmless" credit card offers
by Joy Cross

Here’s the scenario: You’re walking through the lobby by the bookstore, minding your own business, when you spot a table set up with hundreds of Mickey Mouse mugs. You decide you just have to have one. So, you go up to the woman with the pleasant smile sitting behind the table and ask her what you have to do to get one. “All you have to do is fill out this application for a Citibank Visa,” she says. Is that all? What a deal! You quickly fill out the paperwork and walk off with your prize. Simple, right? Wrong.

Many students don’t realize what they are getting themselves into when they fill out all those credit card applications. I know because I was one of them.

What is the harm in having four or five credit cards? More than you know. To begin with, credit cards are far too convenient. If you’re in the mall and see something you want, but have no cash, you can just whip out your credit card like Jerry Seinfeld. Sure, you intend to pay it off when you get the bill. But do you? Always?

Little by little, those monthly statements grow. You pay the minimum and credit card companies keep off your back. But when you pay the minimum, what are you really paying? Most of the time, the money only covers the fees or interest you have built up over the past month. You may pay a few dollars to the principal, but not enough to make a dent in your debt.

These costs begin to accumulate and, before you know it, you owe thousands of dollars. No big deal. You pay the minimum every month and the creditors are satisfied. Why should you care how much you owe as long as you are making consistent payments? At least you still have good credit. Perhaps, but what about when you go to get a loan for a new car or a house? The amount of debt you are accruing now can spoil plans for a happy life later, good credit or not.

Let me explain how this works. When you apply for a loan, you have to list all of your available credit. For example, you have four credit cards with limits of $2,000 each. As far as the bank is concerned, you can potentially charge up to $8,000 dollars. This can seriously effect your chances of getting a loan, even if you are one of those well-disciplined people who may have four or five credit cards, but only use one of them.

But let’s say you don’t have that problem. You are one of the smart ones who cuts up the credit cards as soon as they come in the mail. You don’t have any credit card problems. Don’t be so sure. Unless you’ve called up the company that issued the card and had your account cancelled, you probably still have an account with them whether you use it or not.

I am not wholly against credit cards. It is good to have one or two major credit cards for emergency purposes. I’m not talking about the shoes you want or the Jimmy Buffet tickets you’ve been dying to have. An emergency is when one of your tires gets a flat or you don’t have cash for books. These are times when credit cards are good to have.

However, if you have more than two credit cards, you are a good candidate for credit card problems in the future. My suggestion is this: Cut up all the credit cards you don’t need and call to cancel your accounts. Do your research to find out which cards offer the best rates and the most benefits. Keep only one or two of these, but only use one. And the next time you hear that Mickey Mouse mug calling your name, put your hands over your ears and keep walking.