Credit cards are tempting, and card issuers are good at tempting students right into a cycle of debt from which it is difficult to recover. Students graduate with damaged credit and no borrowing power, just when they need it. 

Important Facts
One third of today’s students graduate with more credit card debt than student loan debt.

Maximum interest rates, which are regulated by state usury laws, have been nearly eliminated as a result of competition between states to attract businesses and the resulting jobs.

Minimum payments are set so low it could take 20 years OR MORE to repay the debt – if the card is NEVER used again.  This can triple the amount of the original charge. Since few people read or understand credit card disclosures, they often find themselves with a rate so high the minimum payment is all they can afford to pay.

Student's Are Targeted
One 2005 student “enticement” came from a major bank that partnered with MTV. The card had the typical credit traps, along with an enticement designed to appeal to students. 

The credit card offers points redeemable on discounted entertainment and music products, as well as airline tickets. At first glance the terms of the card look great:  a 0% Introductory APR (annual percentage rate), no annual fee, and online access.                                          top

The fine print:

• The rate changes to 16.49%APR after the 6 month introductory period; it charges 21.49%APR for cash advances.

• The variable rate (APR) may vary each billing period.

• Cardholders are charged a minimum finance charge each month, whether they carry a balance or not.

• Grace period: 20 days.

• The disclosure states, rates, fees and terms "may change at any time for any reason."      
       These reasons may be based on information in your credit report, such as failure to make payments to anyone when due, new debt, the number of credit accounts outstanding, or the number of credit inquiries. These reasons may also include "competitive or market-related factors."

• If you don’t carry a balance, you redeem no points.

The 30.49% default rate will certainly get triggered with so many loop-holes.  What might trigger the default rate? 

• Your credit card payment is late. With a credit card company based in New York, much of the grace period may disappear due to the length of time it takes your statement to arrive, as well as the time it takes to return your payment.
        
  Many credit card companies make it nearly impossible to pay on time. 
  

• Your cell phone payment arrives a day late.
  

• Your car breaks down; you get a vehicle loan to purchase a replacement.

• You apply for a second credit card.

• Your utility payment arrives late.

• Someone makes a credit inquiry about you at one of the three credit reporting agencies.

Some credit card companies continually review the cardholder’s credit report, looking for reasons to increase the Annual Percentage Rate to the default rate. This policy is called "universal default."

What's different at SESLOC? Our credit card rate is FIXED.  It's based on your earned rate lending score, so the better your credit, the lower your rate.  At SESLOC, your rate is yours to keep or improve within the range of rates we offer. We want to give you our lowest rate ... and we'll show you how to earn it by improving your credit score.

Sources
www.youngmoney.com/credit_debt
www.woodstockinst.org
www.nodebt.org/debt-statistics.htm