Youth & Money
Caution with Credits
October 20, 2006
By Christopher Rocchio
Six years ago Allison Hersh was on her way to college, accompanied by her first credit card and a passion for shopping. Now the Newton resident is in considerable debt, which has postponed her career plans of working as an actress in California or New York. "I’m two years out of college and I’m still in Massachusetts working a job I don’t like," said Hersh, 24. "Credit card debt has prevented me from living my dream while others are pursuing it."
Hersh has now made it a goal to tell college students about the perils of credit card debt. On Wednesday evening, she was at Brandeis University with State Treasurer Timothy Cahill for the launch of "Caution with Credit," a new program that tries to get college students to use credit responsibly.
Hersh told dozens of Brandeis students how her father warned her about the dangers of credit cards before she left for Bridgewater State College as a freshman. While she intended her first credit card to be used only for emergencies, that was not the case. Several bank loans and maxed-out cards later, the debt had piled up. "It felt like I had all this free money, and it just got out of hand very quickly," she said. "I bought whatever my little heart desired."
Cahill said one of the dangers of credit cards is that many college students see them as free money, not realizing that high interest rates can turn a $10 pizza into a $30 investment. "Credit card companies play the minimum payment game, and they set it up so you’re never paying principal, only interest," Cahill said.
This is where the state treasurer said "Caution with Credit" can help. By visiting the program’s interactive Web site, Cahill said young adults can hear horror stories like Hersh’s, have questions answered, receive tips on how to manage credit card debt and how to avoid the pitfalls of it altogether. "There are a lot of good ideas and thoughts on the Web site," he said. "If you can take control of your finances, you take control of your life, and that’s how you get ahead in this world." Cahill also discussed good debt, such as borrowing money to attend school in order to better your financial position when you graduate.
"I don’t want you to think credit is evil," he said to the students. "I understand that you graduate from college with debt due to tuition, and there’s not a whole lot you can do about that." "Caution with Credit,"a program which Cahill said was four years in the making, is also a partnership with Consolidated Credit Counseling Services, a nationwide non-profit organization that helps people manage debt.
"Caution with Credit is a unique program, and there’s really nothing like it out there," said Cynthia Gibbons, director of financial education in Cahill’s office." (Cahill) thinks it’s important to educate young people before they get into debt, as well as if they’re already in trouble."
Since last night’s visit to Brandeis was the launching of "Caution with Credit," Cahill said he hopes to travel to other colleges and universities in the state to educate on the dangers of racking up too much debt.
"Many young people have to learn to delay the gratification a credit card can provide," Cahill said. "I had to delay purchasing a lot of the things I wanted when I was younger, and those things meant nothing compared to what I wanted to do with my life. I don’t want young Massachusetts residents to cloud their opportunities in life with credit card problems."
To learn more about "Caution with Credit," visit its Web site at www.cautionwithcredit.org.
