...111 December 11, 2014 Final Paper Introduction Credit Card debt and college student debt are problems that must be addressed now. We are seeing to many people suffer from both since they are misinformed and not educated about either. I got my first credit card when I was 18 years old. My parents taught me to be careful with my card and if I wasn’t they would cut me off immediately. Unfortunately people are now getting credit cards earlier and parents are not teaching kids how to use credit cards correctly. According to a study, “50.9% of students had debt before college” (Jones 2005). This means over half of the people entering college already are in some type of debt. Students must be educated before college so we can alleviate the amount of students in debt. Graduating students are “leaving college with $20,402 in education and credit debt” (Robb and Sharpe 2009). This results in people trying to dig themselves out of debt for their whole life. The average student also has “4.25 cards in their name” (Davidson, 2004). This is part of the reason why students are accumulating so much debt since they don’t know how to properly manage credit cards. This is because students have a low degree of financial literacy. This means that students don’t know the true value of money and as a result spend more than they have. We can see this by the amount students are using their credit cards. Not only are students getting in debt, but it is also having social impacts. The social impacts...
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...Proposing a solution to Credit Card Debt Credit cards have become a very familiar feature to our life style that it is difficult to imagine a world functioning without them. Credit cards are the most convenient type of payments. The craze of the credit card industry has affected everyone in the world. That could be why Credit card debt is the cause of over one million bankruptcies each year. The reason is that many people get a credit card without reading the fine print before signing for them. By the time annual fees are added on, along with spending needlessly, payments are missed; your balance has already reached its maximum limit. Also in some cases a Lack of knowledge is likely due to a lack of education about personal finances. Almost all students on college campuses report that they are likely to ask their parents questions about finances. However, 30 percent also say that their parents have not discussed such issues as setting financial goals or the importance of savings with them. Students also aren't learning about money in school. Although 62 percent of students reported that they had been offered a personal finance class, only a third of those offered a class actually took it (Norvilitis p 356). Although we all like to place the blame on the credit cards and the credit card companies we need to keep in mind that the real cause of our financial mess is us. It is usually a pattern of unneeded shopping...
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...Analysis of credit card debt By: Corrine Owens M3A2 9/15/15 Analysis of credit card debt pg.1 Based upon a balance of 5,270.00 on an APR of 15.53% the calculation is as follows per US BANK: $256.85 per month will pay off your credit card in 24 months. To pay off your credit card balance of $5,270 in 24 months you need to pay $256.85 per month. This includes your additional monthly purchases of $0 and your major purchases. This assumes no additional charges such as late fees. If you keep your monthly payment at $25 it will take more than 360 months(US BANK,2015). Results Summary | Current balance | $5,270 | Current monthly payment | $25 | Monthly charges | $0 | Major purchase 1 | $0 in 0 month(s) | Major purchase 2 | $0 in 0 month(s) | Annual fee | $0 | Interest rate (APR) | 15.53% Pg.2 | Payment required to meet goal of 24 months is $256.85. | Keeping your monthly payment at $25 will take more than 360 months. | | | Because most credit card companies require individuals to pay at least 2% of their balance due, on a balance of...
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...College students covered in books and credit card debt Abdel.Q Credit card debt has been thought of as an issue for adults with families with finances, however many college students face the problem of debt as well. This particular issue arises from students who are unaware of how to manage their money. One student claims she uses her credit card for basic necessities when her paycheque money runs out. however she is unaware of the the interest rate. Interest is the amount of money the credit card company charges you to borrow money from them. another reason students have excessive credit card debt is because that's the only way they can afford their education. According to the resource institute 19% of students have charged their tuition...
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...Are Debtors Digging Their Own Graves? Who Is At Fault For Credit Card Debts? Americans have become more and more dependent on credit cards, a rapidly growing issue. Although some may disagree, the problem with the credit card industry is not the creditors. It is actually the cardholders. The fault lies within the consumers that do not fully understand their financial circumstances therefore, spending beyond their ability to repay their debts. Having a line of credit should be a convenience, not a must. Reliance: Credit cards have become a necessary part of our everyday lives that we all have and use at some point. However, it is mind-boggling to think that many will use credit to make purchases knowing they cannot afford it. "Even as...
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...Analysis of Credit Card Debt Darlene Rivas Argosy University MAT 109 Professor Morris October 21, 2015 Abstract Our best intentions are to provide and ensure that potential credit card consumers are taking a double look and thinking twice before signing a contract from a banker. There are fine prints in contracts, in which inexperienced consumers miss nearly all the time. In this report, consumers will learn how to formulate the annual percentage rate, determine their monthly payment and principal, interest fees that will be applied their monthly payment. There are useful tips to ensure they will be educated in making the right decisions, and determining which plan works out best for them to prevent further debt. Analysis of Credit Card Debt If a consumer has a credit card with a balance of $5,270.00 with an annual interest rate of 15.53%, they will have to pay a minimum of 2% to the entire balance. Their monthly fee will be $105.40 towards the credit card. Furthermore, $68.20 would go towards the interest, and $37.20 towards the principal. This means that it will take a consumer over 11 years to pay off the principal off to the credit card balance. Assuming that the interest is on a fixed rate, and will not fluctuate throughout the course of time, a consumer would have to contribute an additional $100 towards the principal for the next 5 years, in order to cut the time in half towards paying off the balance. Darlene currently has a Capital One credit card with...
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...Credit card usage and debts among teenagers Cummins, Haskell and Jenkins’s research study, “Financial Attitudes and Spending Habits of University Freshmen” published in 2011 in the journal Journal of Economics and Economic Education Research, examines two factors that are associated with college students’ credit card indebtedness. The author states that college students’ buying patterns and financial values affect their credit card indebtedness. Specifically, students with a tendency towards compulsive buying are more likely and those with effective financial management are less likely to hold credit card debts. Depth interview data further illustrate the contexts and causes of overusing credit cards as well as solutions for their debt problem. It sheds light on reasons why college students fall into credit card debt and suggests strategies for helping them use credit cards wisely. In the 2012 SCMP news article entitled, “Students responsible with dollars and Cents”, the writer gives statistical data collected from the survey which is conducted by the Tung Wah Group of Hospitals and the University of Hong Kong. A total of 802 undergraduate students respond to the survey. It indicates that majority of students possess one or more credit cards and one-third accumulate debt. Half of the respondents in this survey know little about credit knowledge which is significantly related to debt levels. The findings suggest that credit education is needed for students to help them make...
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...The four articles I read give several effects for why students abuse credit cards. First, Jill M. Norvilitis, in the article “Credit card debt on college campuses : causes, consequences, and solutions” says 6 effects. 1. Two or more than two pieces of news diffusely covered in the mediums of university students who passed away as they can’t afford their credit card bills. 2. In two diffusely, before students passed away, they had told others about find stricken by the bills abruptly. 3. Lots of students in school study test period notify having several work to pay the bills they have established. 4. For tother students, the consequence can be insolvent, or having work already hard duty by debt. 5.It is expected that students who have a lot...
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...How to negotiate with credit card companies to settle debt You have done it all to pay off your debt and you are still drowning financially, beside bankruptcy there is still an option. Informing your creditors about your situation and telling them that you have no other option left beside bankruptcy but you want to avoid at all costs. You can ask for a revised payment plan, lower interest rate. You will have to appeal to their desire of getting paid, as faced with the prospect of total loss in case of you declaring bankruptcy they will try to avoid it as much as you do. This sounds like solid good news but it is not a bed of roses, it is painstaking hard work. You will have to make long frequent calls to the bank for them to understand your position. You will need to be consistent and determined with your efforts if you want your bank to make a settlement. Negotiations isn’t easy, but if you follow these steps on how to negotiate with credit card companies to settle debt you will finally get the settlement of your loan that you wanted. 1. The first step is to decide what type of settlement do you want, there are four main types of settlement plans and you can decide which one suit you best depending on your needs. They are described briefly here for your convenience. i) Lump sum settlement: In this plan you can negotiate to pay some amount of the money owed. Usually the payment can be divided into three installments. ii) Workout arrangement: The bank...
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...My thesis will be covering why I think that American’s should not use credit cards and the consequences that come along with being in such an industry. It will be covering the regulation’s benefits many companies have and the don’ts on having them and what will come along with accepting them. I will talk about hidden fees along with annual fees and all the fine print that everyone seems to not read. I will also touch basis on how one can stay out of debt in the paying process even though everyone wants a credit card some should not have one due to mismanaging of their incoming funds period. Writing on how my views on the credit card industry and why it is targeting the venerable and the young college students and people they know need credit and give it to them at a APR that is out of this world keeping them bound and in debt to them. My views on the credit card industry is that if they know that a person has more outgo then income then they should not extend the credit. Some people are so desperate and they know it that they will give them the credit but it will cost them just as much for the credit than the credit itself. My view from my stand point of view because I been there is that as long as you pay on time regardless if it’s the minimum they will keep extending credit to you so you can stay in debt to them and by the time you have paid one thing off you could have bought three of the same thing. In my thesis I want you expect that the information that I...
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...Credit Cards, Excess Debt, and the Time Value of Money: The Parable of the Debt Banana Timothy Falcon Crack and Helen Roberts University of Otago, New Zealand The parable of the debt banana is an analogy between the accumulation of excess personal debt and the accumulation of excess body weight. We created this parable to grab student attention and to then serve as a springboard for discussion of personal debt, time value of money mathematics, the mechanics of credit cards, personal bankruptcy, moral hazard, ethics, and credit card reform. A follow-up survey in a large class (453 students; 84% response rate) showed that 92% of students seeing the parable alongside the underlying finance principles said that it grabbed their attention more than if the underlying finance principles alone were presented, and 87% of students said it made an impression upon them that will make them more careful in their future credit card spending habits. We provide worked examples of credit card use as well as a spreadsheet that lets readers explore these examples and perform sensitivity analysis. INTRODUCTION The parable of the debt banana is an analogy between the accumulation of excess personal debt and the accumulation of excess body weight. We created and presented our parable in a compulsory Finance 101 course taken by all business majors. Most students had little or no exposure to the world of finance and many had poor mathematical skills. Both their lack of financial...
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...Abstract The abusive and excessive use of credit cards are a major economical issue in Turkey for a decade, which poses threats to the core structure of our society and the individuals’ self-esteem. News regarding the problems arising due to the inappropriate use of credit cards increases on a daily-basis, which signifies the fact that the problem shows a continually expanding trend, which is worth carrying an investigation upon. In order to overcome this problem, eight solutions were proposed. These solutions were banning the installments in shopping, copying the American model by providing collateral to the banks while getting a new credit card, requesting a guarantor per person while giving a credit card, giving maximum one credit card per person who has already debt, increasing the commission rate of the point on sale machines, educating people about the usage of credit cards and tell them its advantages and disadvantages, preparing therapy meetings by government for shopaholics and limiting cash advance credit from credit cards. The underlying research methodology of these solutions includes student surveys, internet based researching, discussions with credit card users, and discussions with personnel of banks. These proposed solutions were evaluated according to their effectiveness, feasibility, acceptability, sustainability and legality. Among these solutions three of them passed the criteria and suitable to apply. The chosen solutions can be regarded as the most...
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...struggles in respect to social and economic development. In a book entitled Generation Debt, author Anya Kamenetz discusses some of the struggles that her generation is facing in an economic setting infinitely different from the one that her parents dealt with, merely one generation before her own. Kamenetz outlines how her generations struggles with retrospect to that of her parents and shows the impending graveness of what the future has to hold for future generations. The author defines “generation” as, people within a defined population that during a given time period experience the same important events. Kamenetz compares “human life stages as natural demarcations of growth, like the rings on a tree” (Kamenetz 329). Kamenetz also writes that social and economic structures also decide the divisions between infancy and old age. The author intentionally goes through chronologically and outlines the birth of the term childhood and its effect on people, socially and economically through the centuries. With this timeline given Kamenetz brings the concept of a new life stage forming as a result of the birth of childhood. This new life stage has forced children to go to school longer and seek additional education in order to obtain a job that really does not need further schooling to do. The example that is given is that of a woman with $20,000 in student loan and $5,000 in credit card debt training to be a commodities broker which is a job she could have been trained for with...
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...family budget can help. Nearly every day, we have multiple financial demands placed upon us. Whether it is grocery shopping or paying the monthly electric bill, we're faced with family budget decisions all the time. Family Budgeting It's sometimes difficult to deal with financial planning matters such as family budgeting. There is one more bill to pay, or a big decision needs to be made on an expensive family vacation. But no matter how people might try to deny it, this is a hard rule of life: We make decisions all the time that affect our ability to stay out of debt. Additional Resources Household Budget Basics Budget Worksheet Budget Worksheet Part II Family Budget Basics Saving Money Surviving a Recession Staying Out of Debt Financial Planning After a Death Family budgeting is all about choosing between the options available to us, including those that help us to stay out of debt. One of those important options we have includes creating a family budget that meets our individual needs. Unfortunately, for many of us, budgets are a reality check that we try to avoid. For example, our family budget might tell us that we make enough money each month to pay that electric bill, but we need to give up going out to eat twice a week, or eliminate a habit of buying such expensive clothing. These are the types of decisions we are talking about. Creating a Family Budget If you've been paying bills for at least 12 months, then creating a family budget...
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...F SCF Analysis Regarding Household Debt by Andrew Perdigon Alex Bykovsky Alexander Pankevich Kenza Curry Andrew Perdigon Final Project Alex Bykovsky Alexander Pankevich Kenza Curry SCF Analysis Regarding Household Debt In our final project, we will be looking at U.S. private debt, held by households. We will focus our research on aggregate balances on mortgage loans, vehicle loans, education loans, credit card debt and other private debt related fields, and in doing so we will seek to identify the correlation between these types of debt and factors such as savings, education level, and various types of classifications of households. Our main data comes from the Survey of Consumer Finances from the Federal Reserve, which contains over 22,000 observations and 170 explanatory variables. The SCF is intended to collect detailed information on all household assets (including residences, other real estate, businesses, all types of financial assets, pensions, and other assets) and liabilities (including mortgages, installment loans, credit card debt, pension loans, and other debts) along with auxiliary information useful for analyzing the wealth data (income, demographics, marital history, employment history, attitudes, etc.) (Kennickell 1998) Using SPSS we will analyze this data and determine what correlations exist between the variables and our dependent variable, household debt. Other government sites we will examine are the Bureau of Labor Statistics...
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