Westside Story – College Students & Credit Cards

By belatedly mustering a high level of personal integrity, I can fess up to admitting that today’s column includes what may appear to be stolen material. You may wish to check with your lawyer before reading the balance of my written words to make sure you avoid ending up in criminal court as a witness for the prosecution.

Bart Dalton is a financial advisor with Edward Jones located in Lakewood. If you think you can benefit by connecting with a financial advisor, I recommend that you visit and interview Bart.

Bart is a pleasant, intelligent no pressure money investment guy. Allow me to provide you with a convenient link to Bart’s worldwide website, Bart Dalton – Financial Advisor. Tell Bart; Joe Boyle – The Suburban Times sent you.

Bart’s monthly mailer brochure for August titled Edward Jones Perspective included an essential article titled 4 Money Mistakes Most College Students Make.

I am going to focus on just one of the 4 mistakes listed in the referenced article titled “Getting caught in the credit card trap.” If I wrote about all 4 mistakes, we could be looking at a 4,000-word column which is too much for a person as busy as you.

While at first blush it looks like I stole the material, I am about to share, if truth be known, actually Edward Jones got the idea from Joe Boyle.

My wife and I were working smart not to fall victim to the four mistakes starting back in 1966. If we examine our finances between 1966 and 2019, the record shows in over a half century we paid only 50 cents in credit card interest. Had it not been for a tiny time management error, we would have paid no interest. Other than the 50 cents, we have escaped paying the 12% – 22% credit card interest for decades which amounts to thousands and thousands of lifestyle crushing dollars. We have accomplished this easy feat even though we use credit cards every day and for amounts equalling thousands of dollars.

Credit card companies start to suck college students into financial disaster by stroking their ego. It can make a college student feel grown-up and important to be sought after by banks offering to introduce them to their credit or debit cards. The banks make it all sound so easy. And it is easy; to get into life-damaging credit trouble.

College students often apply for a wallet or purse full of cards. The card company lulls the student into thinking it is okay to add charges on the card beyond what the student can genuinely afford.

My wife and I came up with a money management rule decades ago which we have always followed. RULE: If we cannot afford to pay off the proposed new balance in full based on the new item we are thinking of purchasing we do not purchase the item. No matter how small or large our balance may be; $5 or $50,000, we always pay our credit card balance in full and thereby avoid all interest charges. If we must pay interest, why pay 22% when we can get a loan for 4%?

Students keep adding to the card balance until the card reaches the maximum credit limit. Rather than paying the card down or off, the student activates another card and repeats the cycle running the new card up to its maximum limit. The student can repeat this bad credit card behavior until they hit a financial brick wall.

Imagine you are a student without much money. You receive your credit card statement. The document indicates your balance is $1,000. Your minimum payment is 1% of the balance or a ridiculously low figure of $10.00. Your interest may range between 12% – 22%, making the interest payment another $10.00 – $18.33. Add the interest to the minimum monthly principal amount, and the student is tempted to send in only the $20.00 – $28.33 minimum payment. If only the student had enough savvy to understand they should pay off the full $1,000. If the student took that action, he or she would avoid all interest charges; Zero interest even though they borrowed the money for about a month on their credit card.

Students end up buried with high balances on all their cards and monthly payments and total balances that never go away. Students may find that high credit card debt will cause credit card vendors to stop romancing them. Ultimately the lenders may refuse to issue new credit cards. At the point, the student’s house of cards comes crashing down, meaning they can no longer maintain their excess-spending lifestyle by adding living and lifestyle expenses to yet another new credit card.

If you are a parent with a college student, please teach them these financial principles. If you are a college student, please use your college caliber brain to think about what your parents, Edward Jones, and I are trying to share with you. If we are correct in what I have written, and you choose to follow our suggestions, you will benefit for the rest of your life. If we are correct and you decide to ignore our recommendations, you will pay for your mistake for the rest of your life.

Most college students are age 18 or older, which makes them an adult. If your son or daughter goes off to college and ignores your, Joe Boyle’s and Edward Jones’ advice, don’t beat yourself up over their failure. We did our best to help them be successful as they make their way in their new world. Some college students need to learn life lessons the hard way. We tried. That is what matters.

The students I feel sorry for are those who never had an opportunity to learn these simple and easy to perform financial management axioms. I would hope that every child can learn these money management ideas either at home, in school, in life, or through common sense. While one does not have to be a genius to comprehend what I am trying to teach, it does take some intelligent thinking, recognition of the facts, making good choices, and discipline.

Let me set the record straight on one final point to avoid any confusion regarding how I feel about interest. While I have spoken negatively about credit card interest, I am not saying all interest programs are harmful. It can be smart money management to become involved in many financial arrangements where you are obligated to pay interest. Before doing so, a smart money manager asks several questions:

1. Is it beneficial for me to pay interest on a particular item or project?
2. What is the interest rate?
3. What kind of interest; simple, compound, annual, monthly, daily, (Hourly interest – a favorite for Mafia loans).
4. Is there a payment [or-more] clause?
5. How is the interest calculated?
6. Can I improve my financial profile by shopping for the best interest and financial loan agreement terms?

I began this article talking about stolen material. I did that in an effort to catch my reader’s attention while at the same time trying to write something that would be fun to read.

Realistically, I did not steal an idea from Edward Jones, and Edward Jones did not steal an idea from Joe Boyle. When you get right down to it, Edward Jones and Joe Boyle are merely making an effort to help college students establish their new independent adult lifestyle in a way that helps them succeed in both the long and short term.