Students are a popular target for credit card marketers, with some students receiving as many as 15 credit card offers in the mail each week. Some offer an introductory rate of zero percent for the first six months, with rates rising to 17, 18 or even 19 percent after that.

Bank-issued credit cards have been around since the late 1950s, and they are well accepted as a method of payment. Some students use their cards responsibly, while others run up late fees and pay high interest rates.

According to the American Bankers Association, studies reveal that American high school seniors averaged a mere 50 percent proficiency when tested on personal finance basics.

“I would say that about 90 percent of students at SF State have credit cards, and approximately 25 percent are in debt,” said Yanchun Zhang, an economics professor at SF State.

Psychology major Sonnet Harrison, 25, said she accepted a credit card with an introductory offer which included no interest on purchases for the first six months. Then the interest rate went up to 17 percent.

"Cash advances are even higher," said Harrison. “Once I had to take an advance of $550, then $50 and $100. I guess this is the way it is when you don’t have money.

“In addition to school, I have two part-time jobs, but I find myself running out of money. I have had car repair expenses, dental bills, and new glasses. My family can’t afford to help me at all.”

For a credit card balance of $1,000, a student might have a monthly minimum payment of only $20. But financial experts said a student making only the minimum payment on such a debt would pay hundreds of dollars in interest.

“Assuming there is no annual fee or late charges, it will take 79 months to pay off that $1,000 debt if the interest rate is 15 percent,” said Zhang. “At 15 percent, the total interest will be $580, so the total expense will be $1580.”

Zhang said that students should shop for a credit card without an annual fee and a low interest rate, offered from a reliable, known bank.

But even with good advice, some students still fall into the cash advance trap.

Zhang said that cash advances should only be used as a last resort.

“Credit card cash advances can provide instant access to 'cold cash' in times of financial emergencies,” said Zhang. “Cash advances are typically accompanied by fees and exorbitant interest rates, sometimes as high as 22.8 percent. If you use an ATM machine, an additional fee may be applied,” said Zhang.

There is another way around this scenario for lucky students such as Christopher Peterson.

“My parents gave me a secured credit card when I was traveling. It was just for emergencies; I never had to use it,” said Peterson.

A secured card has a guarantee of payment from a savings, checking or another credit card. It means that if Peterson had charged something or had gotten a cash advance, his parents guaranteed payment.

Not all students, such as Harrison, have parents who can come across in emergencies.
If cardholders miss payments, a negative mark will appear on their credit ratings – that is a person’s financial report card, said banking experts. It can haunt a person for years and keep them from
getting a car loan or a home mortgage.

Many employers and landlords check credits reports before offering a person a job or an apartment, banking experts say.