Students and Credit Cards

Seeing young people with lots of freedom, plenty of purchasing power, and in many cases a limited understanding of credit and debt, credit card companies like to put cards in the hands of college students.

Sometimes it is difficult for parents to explain to the student the possible consequences of all that “free” money, They do not understand how fees and penalties can add up, nor how the minimum payment will not effectively whittle it down. They do not understand how a bad credit report can make it hard to take out a mortgage or rent a home in later years.

Student credit card debt continues to rise. Students graduate with an average credit card debt of $4,100. That has increased from $2,900 four years ago. The average number of credit cards per student is four, with about half of college students having four to six credit cards or more. The money goes to anything from pizza to tuition.

In pursuing students, card issuers have been noted for their aggressive habits. They get assists from the institutions themselves. Sometimes, the contact information comes straight from the school, with the school making money from supplying the information. In some cases the schools let company representatives meet face to face with students on campus. Some states have gone so far as to ban that practice.

The recent credit card reform bill, set for implementation in February 2010, tightens the rules for handing out credit cards to minors, a move some hope will ease the amount of debt that teenagers are running up. It would be a great benefit to the young people, who are only hurting themselves.