Episode 181

Going to CRNA School with Credit Card Debt- What You Need to Know

Oct 16, 2024

CRNA School with Credit Card Debt Cover Photo

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Explore the complexities of managing credit card debt while pursuing a career in Nurse Anesthesia. This discussion is not just crucial for those currently applying to CRNA school, but also for future applicants and even recently accepted students striving to navigate their finances wisely.

Understand why carrying a balance on your credit card can cost you more than it’s worth. Featuring insights from our special guest, Vrinda Gupta, founder of Sequin, this episode is packed with expert advice to help you secure your financial health while pursuing your CRNA dreams.  

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Going to CRNA School with Credit Card Debt- What You Need to Know

Hello future CRNA! Welcome back to the CSPA Podcast. I’m your host Jenny Finnell. Today, I’m going to do something a little different, kind of shake things up. We’re going to talk about going into CRNA School with credit card debt and what that actually would look like. For those of you listening who are planning on CRNA school, even if it’s years away, this episode is for you. If you’re already in the trenches of applying to CRNA school or even being accepted to CRNA school, I still think this is going to give you a good listen because I want you to be very aware of what can happen in this vicious cycle of credit card debt.

Paying for CRNA school is incredibly challenging. For those of you that are part of CSPA, you know that we bring in a certified financial planner for free financial planning education every single quarter. Her name is Natalie Kratzer with Thrivent Financial. She’s wonderful. So if you’re a part of CSPA, or if you’re not a part of CSPA, run to the door and join today, but take part in those sessions, it’s free and it’s a wealth of information to really help you financially prepare for the CRNA journey.

First, before I dive into the meat of this episode, I wanted to kind of give you some context on credit card debt and what that may look like and just kind of throwing out some examples because, if you’re like me, it’s kind of hard to contextualize credit card debt. It’s one of those things that you know is bad, but you don’t know how bad it can get or how quickly it can spiral out of control. The math is really complicated and it can be kind of difficult to figure out what happens if I spend XYZ but I don’t pay it off until this amount of time.

But luckily I have had the help with AI to kind of figure these things out so I can give you really accurate numbers so you can kind of get a picture of, oh my gosh, this is a big deal. This is why people always talk so fearfully of being careful with credit cards. So let’s go ahead and share some examples with you.

How Credit Card Debt Can Burden You While In CRNA School

So just to give you some context, the average APR, which stands for annual percentage rate, varies between 16% and 25%. If you have really good credit, probably above a 700, I would say you’re going to have on the lower end of that spectrum. But if you have a lower credit score, you’re going to probably have on the higher end of that spectrum, like 25% or maybe more depending on how poor your credit is.

And of course credit cards will tempt you with a 0% introductory rate of 0% APR. I’ve fallen victim to that numerous times. The key with that is to be very careful that you have a really good game plan on how you make sure that you don’t end up accruing interest once that 0% APR offer wears off.

I’ve talked to Natalie a lot and she cringes when she has students come to her and say, I want to go to CRNA school, but I have $40,000 of credit card debt. That’s so hard to work around, and you’re going to understand why when I’m done kind of explaining these numbers to you, but let’s just put it a lower number and let’s just say maybe you have $4,000 of credit card debt. This is again, something that you carry, pay the minimum payments on every month and you’ve just kind of gotten used to it. It’s kind of where it hangs out.

It was right around $4,000 and let’s just say you choose to go back to CRNA school and you’re like, you know what? I am not spending another single dollar on this credit card. I’m going to start using debit card only. I’m just not going to spend another drop. I’m going to focus on just making the minimum payments over the next three years so I can not have more debt when I’m done with school.

I want to just share with you what that would look like if you went into CRNA school with $4,000 of credit card debt, knowing that all you can possibly do while you’re in school is a minimum payment. And let’s just say you have 18% APR, which is on the lower end of what it could be, right? It could go up to 25%. So we just did 18%.

Now, let’s just say they make you pay 2% of your balance every month. Again, you’re going to be in CRNA school for 36 months or three years. So if your initial balance is $4,000, and you make just the minimum payment, which is $80, what portion of that $80 goes towards that $4,000 balance versus the interest rate at 18%? The answer is only $20 goes towards your balance and the rest of it, the $60 goes just towards interest.

So again, on $4,000, you make an $80 payment…but your new balance is still $3,980! It only went down by $20. Kind depressing already, right? You’re like, oh man, 20 bucks. That’s it. Yeah, that’s it. So let’s just say again, you don’t spend a single dime on this credit card and you just keep paying his minimum payments through grad school. By the end of grad school, by the end of 36 months, that same $4,000 credit card, well have a new balance of $3,339.57

A person looking stressed out while looking at a pile of credit cards

CRNA School with Credit Card Debt: If you make just the minimum payment on a $4,000 balance, let’s say that’s $80 with an 18% interest rate, only $20 goes to the actual credit card balance and $60 goes to the interest. You paid $80 but your $4,000 balance only goes down by $20!

So that means you have only decreased your balance by $661 by paying the minimum payment on it for over three years. But now the real question gets to be how much have you paid in total? Meaning how much interest have you actually paid in that three years? You have paid over $4,130 of interest- more than what your balance started at. So you essentially have paid more than double in just interest alone with only hitting $660 of interest or principal your balance. So that’s really depressing, right?

Oh my gosh, I just paid on this for three years and I still owe $3,339. I’ve paid in total over $4,791. That’s a really hard thing to swallow. So I wanted to just paint this picture and I’m not trying, well, I guess I am trying to scare you. I want you to be careful and I want to see you make smart decisions prior to going to CRNA school to make sure that does not happen to you, because that’s just really unfortunate.

Now, maybe you had no other choice. You’re already kind of in it. You’re like, oh well, it’s too late. I’ve got to just deal with what I have, how the cards have been dealt kind of thing. Know that if you have a $3,339 balance, we’re going to CRNA school. Just use your first paycheck to pay it off.

Paying Off Credit Card Debt After CRNA School

The biggest or the smartest thing you can do when you’re done with CRNA school is to keep living at your current living arrangements for several months after CRNA school and then take all that money that you are earning as extra at that point and put it towards things like this. So pay it off of that first paycheck, that would be my suggestion. Don’t carry any longer than you have to.

You’ll get more than $3,000 for your first paycheck. Don’t freak out, but it’s going to take a big chunk of it to pay that credit card off, especially if you’re starting at a new grad pay. I would say you can probably expect take home, depending on again, your hourly rate to be right around anywhere from $5,000 to $6,000 on a biweekly schedule. So $12,000 a month for your CRNA salary.

Again, this can vary a lot, so don’t set my words in stone, but just know that’s probably a ballpark to estimate about what you’ll make every two weeks. It’s about $6,000. So again, if you had to pay this credit card off, I think you could easily do that.

Alright, so another situation is let’s just say you had this $4,000 of credit card debt going into CRNA school, but you have some additional spending needs when you’re in CRNA school. Maybe you need a new tire for your car, maybe one month you’re kind of tight on groceries, or maybe you want to go out to dinner with some friends. Maybe you want to splurge a little bit over spring break and go on a little mini vacation, or maybe you’re in a friend’s wedding or there’s all kinds of things that come up in life that maybe aren’t in your typical day by day budget.

So you use this credit card to maybe put on average an extra $500 a month of spending on this card over 36 months. This is scenario number two. All right, so in this scenario, let’s just kind of skip to the point and keep in mind, as you keep adding money to this credit card, your minimum payments, your minimum is going to go up every month. So we said initially the minimum payment was $80, right? Well, by month six of adding $500 a month to the same credit card, your minimum payment now is $127. By month 24, that minimum payment is $289, and by month 36, that minimum payment is $388.

This could be a real problem, especially if you’re on a fixed income and you’re like, I can’t afford that minimum payment. You can really getting yourself in a lot of trouble really, really quickly if this happens to you. So I wanted to make sure I point that out, that even though you’re adding money to this card, your minimum payments are going to go up every month because of it, and sometimes that makes it so you can’t even afford to pay the minimum payments and you get stuck with more fees and things of that nature.

Again, that is something you don’t want to run into, but okay, you’ve spent the money over 36 months. Now this credit card, instead of $4,000 at the end of 36 months is now at a balance of $19,850. I mean, you did put $500 a month over 36 months onto this credit card; that’s spending $18,000 in three years, $500 a month.

The total interest you’ll pay on this alone is $6,449, with the total paid over 36 months being $8,598 if you’re making the minimum payments. So you’re left with $19,850 at the end of that three years. And again, the way that breaks down is if you think about it, you essentially still have this remainder $19.8 K left to pay off making your total that you will have paid $28,400! And that’s only if you can pay off that lump sum on $19,000 when you’re done with school.

It’s not likely that you’re not going to pay that off in the first month after CRNA school, maybe if you busted your butt and worked a ton of overtime, but typically on your first month, you’re not going to be doing that. So more than likely you’re going to carry this balance with you for a couple months after you graduate from CRNA school, which means that $19,000 could go higher.

Not Working While in CRNA School

I just want to point out there that this is a pretty hefty price to pay to carry credit card debt in CRNA school, and I want so badly for that not to happen to you, and I want you to plan for this. Please understand the ramifications of having this debt carried while in school. Don’t get me wrong, you need a credit card to build up credit and be able to take out loans and things of that nature, but you just have to be so careful and going to CRNA School is such a unique event in your life, something that you’ve really never experienced before.

Because not being able to hold a steady, full-time job of any kind, even a part-time job can be really, really hard to figure out your finances, especially if you’ve been out of school for a while, working for a while and you’ve been really used to your lifestyle. It may take really dramatic measures to really adjust your lifestyle to fit the financial restraints of being in CRNA school.

Going to CRNA School with Credit Card Debt- What You Need to Know Share on X

Again, if you’re part of CSPA, I hope you take advantage of our free financial planning with a certified financial planner, Natalie Kratzer. She’s wonderful. Make sure you register for the next event. She does it every quarter, and we always post the next one on our dashboard inside CSPA.

Now to introduce the rest of the episode; that was just an intro to paint some context around why this is a big deal and essentially why I thought this was an important episode to bring to you.

Vrinda Gupta is the founder of Sequin, which is a debit card, but here’s the kicker, which is why I thought this was so interesting. It’s a debit card you guys, but it accrues interest like a high yield savings account, so you can actually earn money by just having a debit card. Why have the banks not done this? Because they make so much money on you paying these credit card fees, so they don’t want to incentivize you to pay via debit card.

Vrinda used to work at Chase; she has a background in developing a rewards program at Chase, and she just equally was like, “this is a huge problem I want to solve.” People are going to debt because they want to a rewards credit card, and then they don’t know how to manage it effectively, and then they spend their rest of their lives battling this credit card debt.

Vrinda Gupta, Founder of Sequin

Without further ado, let’s go ahead and get into the rest of today’s show. Hello and welcome back to CRNA School Prep Academy podcast. I’m your host, Jenny Fennell, and today we have a very special guest episode with Vrinda who actually started a company called Sequin. And our topic today is going to be going into the CRNA School with credit card debt. We’re going to unpack this, you guys, I’m so excited to have you on the show. Welcome to the show.

Thank you for having me. I can’t wait to have this conversation.

Yes, me too. And this is a common pain point among CRNA hopefuls- not only are they worried about how to pay for CRNA school, but then some of them may have outstanding credit card debt. So we’re here to help, with your background, which I would love for you to share more about and help unpack this issue. So Vrinda, if you wouldn’t mind sharing with our audience kind of how you got started and this venture of Sequin.

Yes, absolutely. So super excited to chat. My background, I started off my career at Visa and I was building many popular credit cards, and my focus was actually building rewards programs and popular credit cards like the Chase Sapphire Reserve. I applied for the credit card that I helped create, and I was actually rejected. That’s crazy.

As a first generation immigrant, I watched my moms really struggle with the financial system, and that was actually one of the reasons I wanted to work at Visa was to just understand a really important part of everyday life, goals and finances, touch everything. When I was rejected, I just realized that there was so much more for me to know, but also if I was having these bad experiences in the credit world from having built these products, what is happening to so many other people, especially women and minorities and those who might not have had the benefit of financial education passed down from our parents, that really is a privilege.

And it just got me thinking about the state of finances today and whether there’s a way that we could do better and really create a financial system and a platform that centers the need of women and minorities. What we see is when you build for that population, it works. The products work better for everyone. I know that the listeners here do not only identify as women, our product is open to everyone, but it does kind of work where you meet the needs of those who need it the most and it works for everyone else.

Yeah, I love it. So I was going to say this a little bit later, but I’m sure everyone’s kind of like, well, what is Sequin? Because what you have built is very unique, so maybe we should just get right into that and then dive into the credit card debt aspect after that.

I would love that. So as I was building these credit cards, I was focused so much on rewards; when I went out after I got rejected and tried to understand what is the problem with the financial system, the conversations I kept on having were, “I am in credit card debt and I really like rewards. I want to play that game. My favorite influencer is talking about that, but I am in credit card debt. What do I do?”

My answer to that was, if you were in credit card debt, there’s not much else you really should be doing financially outside of paying off that debt. There is a small caveat that having an emergency fund is really important, so have an emergency fund, but you shouldn’t be investing if you have high interest credit card debt, it’s never going to math out.

the word "debt" with a calculator, coins and a budget spreadsheet nearby

CRNA School with Credit Card Debt: if you have credit card debt, there’s not much else you should be doing outside of paying off that debt.

You shouldn’t be using a credit card to earn rewards If you have high interest credit card debt, that’s not going to math out. And so I just said there isn’t really a great solution out there for those who are working on paying off credit card debt. The first step is really to stop using the credit cards and switch to a debit card.

Pay Off Credit Card Debt Before Starting CRNA School

And for those of you listening who are planning on CRNA school, if you have the time, the time is of the essence, paying off your credit cards is one of the very first things you should really do prior to even applying to CRNA school. You do not want to carry that credit card debt into CRNA school when your income becomes very fixed or even limited, and then you end up paying loans with loans, which I’ve been there. So not ideal, not fun.

I would love to dive now into how credit cards work. I know part of your Sequin has a community aspect where you do a lot of education, so I’d love to pick your brain on this aspect and dig into help educate our listeners on what does it mean to have a credit card and what are some of the best options out there to have if you needed one.

Yeah, absolutely. I love this question. And the reason I love it is because very few of us are actually taught on how credit cards work when we get them right, it feels fun and games, it’s like, okay, great, I’m going to get some rewards. This is free money. But what we’re not taught is credit card interest is some of the highest interests that there is out there in terms of loan options. As of this week, credit card interest rates are over 25%.

I know you and I talked about this, Jenny, but if I came up to you and I said “Jenny, here’s free money.” You’d be like, okay, great. But if I was like “Jenny, here’s free money, but you’re going to owe me over 25% on every single one of those dollars and the money that you owe me is actually going to compound on itself, so whatever you owe is going to owe more and more.” I don’t think any of us would take that deal.

But the challenge is these cards, your favorite influencers promoting it, your favorite actress is promoting it, and you’re like, you know what? Everyone has them. It’s okay. And I think that’s one of the pieces that is really important to understand is how does a credit card work? What is a credit card? What’s a debit card? And the difference between the two is a debit card, it’s your own money, taken immediately. So let’s say you’re at Target and you swipe a debit card, that money is connected to your bank account, and so the money’s going to come out of your bank account to pay Target. The difference is when you have a credit card, it’s kind of like an IOU.

Credit Card Payment Options & How Credit Card Interest Adds Up

Let’s say your credit card is with Chase, for example, and you go to Target and you make a purchase. Basically what happens is Chase is like, “Okay, I’ll spot you up until the end of the month and then at the end of the month you have a few options to pay me back.”

One option is you can pay that back in full, right? Let’s say the total you spent at Target was $100. At the end of the month, Chase says “Pay me a hundred dollars, I’ll give that to you without any interest.” And it’s like, okay, great. And that really is the best way to use a credit card to use it like a debit card, to pay it off on time and in full every single month if possible. So that’s one.

The second option is you can pay some other amount. Let’s say you only want to pay $50 of the a hundred that you owe. Then Chase is like, “Great, give me the $50, no interest on that. The other $50, I am going to charge you interest.” Now, next month that $50 that you have remaining is going to start having interest applied to it.

Then, at the end of next month, if you don’t pay it off in full, the interest that you accrued the month before is going to compound and cost you the month after that. Anything you pay that’s not “in full” is going to be costing you interest.

The challenge with credit card interest is that, okay, you can start making the payment, but there’s still that initial amount, right? That initial a hundred dollars or that initial $50 that’s left in our example, that is going to keep on earning interest and you’re going to be in this cycle of just paying that interest off because you’re not getting to what we call as the principle, the main part.

So other options are paying the minimum, that’ll keep your account going, and it feels nice. It’s like “I have access to money and I only have to pay $35 for it a month,” but what they’re not really telling you is, okay, how much is that actually costing you?

I will share one kind of not so fun fact that I learned was, when credit cards were created, they actually worked with behavioral economists and asked, “How do we get people to pay credit card interest?” which is how these companies make money. So that’s where the idea of a minimum payment came in. The behavioral economists said “If you give someone that option, they’ll most likely take it.” And that’s how they make money, I mean, these are big companies that are really smart.

So I just want to say that if you are in credit card debt and you’re working on paying that off, it is not your fault that you’re in this situation. I mean, it makes sense, right? It’s free money, or so you think, until you actually peel the layers of the onion and it becomes a situation where it’s challenging to pay off. Every single day that you wait to start paying that off, it’s just more and more interest, which is incredibly stressful. It’s not something I wish upon my worst enemy.

Yeah, it is. And eventually that minimum of payment grows, right? Because the balance is going to grow. And like you said, you get stuck in the cycle of only paying the interest and the balance just keeps growing, and then you become to the point where you just can’t pay it. And that’s usually how people have bankruptcy and potentially lose their house and everything else. Oh gosh.

So I would love to, we kind of talked about how the interest payments work and if you don’t pay it off; let’s kind of slip into more of a positive thing though. Yes, I feel like we started this scary fearful way, but nonetheless, people need to know, be informed before they make these decisions. But how can you best maximize the rewards if you’re going to have a credit card?

a woman holding up a credit card that says "rewards"

CRNA School with Credit Card Debt: The best way to use a credit card is to use it like a debit card.At the end of the month, whenever your statement due date is, I want you to pay that off in full.

Credit Card Rewards Programs

Yeah, absolutely. So as I mentioned, the best way to use a credit card is to use it like a debit card. And so at the end of the month, whenever your statement due date is, I want you to pay that off in full. Actually, if you are in a privilege where you don’t have any revolving credit card debt, meaning credit card debt is debt that you’re actually paying interest on, not what you’ve accrued until the end of the month, then I even recommend paying off your credit card once a week because that’ll really help your credit score.

That’s kind of a hack that we share in our Sequin communities. Do the payments once a week, and on average, we’ve seen credit scores go up 20 points in just a week. I’ve actually had some women come to me and tell me their credit score went up 200 points in just a few weeks doing this trick.

Anytime you’re not paying credit card interest, that is the best way to maximize credit card rewards. You’re living within your means, you’re putting all of that spending on a credit card but you pay it off in full each month. So that’s why I recommend credit too; if you do not have credit card debt or you don’t think you’re going to be susceptible to credit card debt, then I always recommend a credit card, put all of your spending on a great rewards credit card and maximize the heck out of those points.

But unfortunately, so many of us are working on credit card debt. So again, if you were in that situation, a rewards card is never going to have you come out on top.

Yeah, I love that. One thing that, and I, this is maybe a personal side of my experience with it, but growing up, I love you mom and dad, but I watched them play that game and juggle credit cards. And it can be a really positive thing if, like you said, you pay those statement balances and don’t overspend on your credit cards, but it’s so tempting when you really want something, especially a big purchase where you’re like, “Well, I can’t afford it now, but maybe by the time the statement balance is due, I will.” Then you’re kind of playing that risky game.

I mean, sometimes I think people are like, “Oh, I’ll have the money. I’ll just work for overtime.” What if you get sick and you have to cancel some of that overtime? Or what if they don’t have as many shifts as they normally do for you at the hospital for overtime, I mean, there’s all kinds of things that can come up. What if you have an emergency visit with one of your kids or your car breaks down and now you have this unexpected expense. It’s really empowering to use a debit card to make sure you’re holding yourself accountable to only spend what you have and really question your spending prior to doing it. So I think this is great.

A lot of the women we talked to, they were like, “I’m not investing because I have credit card debt.” And again, that math’s not going to match. You need to pay off the credit card debt before you invest. Or this idea of having your money in multiple places for whatever reason just didn’t seem appealing. We’re a judgment free zone. We always say be growing your money if possible, but if that just doesn’t work for you, it doesn’t work for you. That’s fine.

I think what’s detrimental is when there are these pre-prescribed ways of saying, “You have to be managing your finances this way”, or what works “the best way” just might not work for you. So what we said was, “Okay, well, you have different options to grow your money. You could put your money in a high yield savings account”, but that may be harder if you are living paycheck to paycheck, especially if you’re a student, right?

I remember being a student and money’s tight, but you still want to be growing your money. A dirty secret with your big bank checking account is they’re earning a lot of money on your money that’s sitting with them because they lend it out to other people or other institutions and then they keep that money.

Well, thank you so very much for your invaluable insights. How can people find you, connect with you?

You can follow along with us @sequin_card. We are on all the platforms but We’re the most active on Instagram and on TikTok, so you can follow us there.

Thank you, Vrinda. It’s such a pleasure having you and hats off to you. I’m so excited for what you’re developing.

Thanks so much for supporting Jenny. I really appreciate it.

Thank you for tuning in. Stay strong. We’re rooting for you, future CRNA.

Important Links

Join the Free CSPA Community! Connect with a network of Aspiring CRNAs, Nurse Anesthesia Residents, practicing CRNAs and CRNA Program Faculty Mentors here: https://www.cspaedu.com/community

Get access to application & interview preparation resources plus ICU Educational Workshops that have helped thousands of nurses accelerate their CRNA success. Become a member of CRNA School Prep Academy: https://cspaedu.com/join

Get CRNA School insights sent straight to your inbox! Sign up for the CSPA email newsletter: https://www.cspaedu.com/podcast-email

Book a mock interview, resume or personal statement critique, transcript review and more: www.teachrn.com

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