News Digest

As a first-year college student, Carley Fillinger of Waterloo, Iowa, did what everyone else seemed to be doing. She signed up for credit cards whose companies offered bags of candy or a free T-shirt for a completed application.

“Once I got the cards,” she says, “I didn’t relate to the fact that I had to pay all my purchases off, and that making the monthly minimum payment is not enough because you still have interest, and if you get behind, late fees. My credit card debt kept building and building, and then I gave up.”

When Fillinger gave up trying to keep up with her mounting credit card debt, she also gave up her education. She dropped out of college to get a full-time job to pay off those cards.

It didn’t work. At age 27, Carley Fillinger declared bankruptcy.

Her story is not uncommon. Credit cards have been making their way into the hands of younger and younger consumers in recent years, with college students being a target demographic.

“College kids are one of the most susceptible groups to racking up credit card debt,” says William Hunt, legal counsel for A/G Financial in Springfield, Mo. “Credit card debt, unless properly controlled, can really dig young people into a hole.”

Young people aren’t the only ones buried under debt. Bankruptcies have nearly doubled in the past decade in the United States, with more than 1.6 million people filing in fiscal 2003 alone. Consumer debt hit an all-time high of $1.98 trillion in October 2003, for an average of about $18,700 of debt per U.S. household. Credit card debt reached $735 billion in January, for an average of $10,000 per card-carrying household.

“If you don’t have the money in your checking account, don’t buy anything using a credit card,” Hunt advises. “Pay the card off immediately every month, and don’t get to the point where you need to pay finance charges.”

Don White, president of Treasure Coast Financial Services in Stuart, Fla., names five behaviors that keep a person in debt:

1. Mimicking lifestyles of loved ones.

2. Being overcome by peer pressure.

3. Having no idea where the money goes.

4. Gaining easy access to credit.

5. Yielding to yearnings regardless of earnings.

For those already in debt, Consumer Credit Counseling Service of Atlanta suggests sending payments on time, always paying more than the minimum due, tackling high-interest cards first, transferring balances to lower interest cards and negotiating with your creditors.

Carley Fillinger is approaching 30, and still battling debt. Months after filing bankruptcy in 2001, she became entangled in a new wave of credit card debt.

In addition to following the debt reduction advice from CCCS, Fillinger made lifestyle changes. She moved to a duplex with lower rent. She shops at discount stores and garage sales rather than malls. Dining out is rare.

Fillinger is paying off her last two credit cards, narrowly escaping a lawsuit with one creditor. She graduated in May with a degree from Upper Iowa University. It has taken more than a decade for Fillinger to get out from underneath the debt, and she vows never to carry another card again.

“Credit cards aren’t sinful,” says Howard Dayton, co-founder of Crown Financial Ministries in Gainesville, Ga. “They are dangerous.”