In This World - Problem of the Day

CNN News Clip

Credit cards for students mark their passage to adulthood. We are told that 70% of college students have a credit card, and we are also told that they often fall into a credit card trap with an average balance of $2,000. What is sometimes difficult to understand is that if a person has an $1,800 balance and makes only the minimum payment, it will take 14 years to pay off that balance.

However, sometimes credit cards are lifesavers. Marsha, for example, must have surgery, and she does not have the $3,000 cash necessary for the operation. Talking to an administrator at the hospital, she finds that it will accept MasterCard, VISA, and Discover credit cards. All of these credit cards have an APR of 18%, so she figures that it does not matter which card she uses, even though she plans to take a year to pay off the loan.

In this section, Marsha will learn that it does matter which credit card she uses, that not all credit cards are the same, even among credit cards with the same APR.