Proposal: Draft

Cassie Lyne
English 11
11/7/2009
Project3: Proposal
Draft*



The year of 2008 was the worst year yet concerning debt and job loss. The
unemployment rate still continues to rise throughout 2009. College students are hit hard by this economic problem. Students are struggling to pay for textbooks, student loans, and other college fees. Students now face the difficulty to find a part time job, and are affected by their parents being laid off, and not able to help with any expenses. “College students have long been an attractive demographic to banks because they have few financial ties. Banks compete to provide students with credit cards and bank accounts in hopes that students will come back to the banks when they need mortgages and car loans.”(USA Today) Last year for Christmas I felt that it would be a good idea to apply for a credit card to afford Christmas gifts for my family. Clearly nothing forced me into applying, but I felt the need to apply, and succeeded to get a Capital One credit card. Mostly all teens my age in these tough times have a least one credit card. It could be a major credit card like Capital One or a store credit card like Express or Macy’s. Credit cards can be a great help financially, and also in terms of building a good credit score for later in life when possibly purchasing a house, or a car.

The problem with students receiving or applying for credit cards I believe is they don’t read the “fine print”. Interest rates are a huge factor when applying for a credit card which is not something the sales associate mentions when you are checking out, and they ask if you would like to see if your eligible for there store credit card, and that you can save an extra 15% for opening one today. The fact is that most credit cards these days have an interest rate of at least 20%. For example say you purchased a new coach handbag from Macy’s and the sales associate asked would you like to open up a Macy’s charge account with us you will save 20% on your first purchase. The first thing that would come to my mind is: This is great! I save 20% on my new handbag and I don’t have to pay for it until almost a month from now. This is true, however when you receive the bill a month later lets say the money that you had saved to buy your handbag you used for something else so you pay the minimum amount on the card which is usually $10. There is nothing wrong with this either but lets say your new coach handbag cost $250 you saved 20% at the register so it was actually $200. You paid the $10 on your card leaving $190 left so you would figure that next month you can maybe pay the rest off, or pay off a little more. This is where the problem comes into play. On that $190 that’s left over you will be charged lets say an interest rate of 22% this means that next month instead of your bill being $190 it will be $231.80 because the company is charging you 22% of what you did not pay. Now it is almost as if you made no dent in your payments at all, and instead of saving 20% on the handbag you have only saved 10% and the $10 you paid counted for nothing.

All of these numbers may seem confusing but they are facts that most teens don’t realize. When applying for things like student loans I have witnessed a close friend just simply accepts the loan without even acknowledging when it would have to be paid back, or the interest rate or anything. The fact is that banks and credit card companies try to sound as appealing as possible so they can gain your business. “Banks are getting more aggressive — and creative — in their efforts to pitch credit cards to college students by hawking cards near college campuses and striking exclusive partnerships with college alumni associations, according to a growing body of research.”(USA Today)

My simple solution to this problem is that students need to pay more attention. Having a credit card isn’t always bad they can actually be a great help if used wisely. I suggest that everyone reads the fine print. When applying for a credit card or even a student loan always pay attention to things like interest rates, annual fees, and how long you have before you have to start paying money back on a student loan. All of these details are very important because if you are aware of them it is easier to avoid problems.