Credit Card Use Declines Among Students

Are you in student loan debt? You’re not alone. The average college loan owed by the class of 2010 was up to $25,250 by the end of 2011. On a positive note however, on average, the credit card balances have dropped to $811, from a record of $3,173 in 2009. The percentage of students owning credit cards has also decreased from 84% to 40% within the past two years.

Due to the Credit Card Act of 2009, there are provisions in place making it more difficult for college students to access credit cards. For example, card companies are restricted from giving away free gifts.  Additionally, card companies are to require that those under the age of 21 have a co-signer. For your information, NEVER co-sign for a friend’s credit card. This means that if they cannot pay it, you will be responsible for it.)

Although legislation is helping people do the right thing by implementing these restrictions, owning a credit card isn’t always bad. Building a credit score is a good thing, but managing this credit properly is critical. Here are a few things to remember:

  • Seek cards that offer deals for students. For instance, some offer cash back on books, gas and other items for a lower interest rate and maximum spending amount.
  • Use your credit card sparingly.  It is good practice to charge a little on it every month – and then pay it off every month, too.  This process will help you build your credit score.
  • Do not get multiple cards and do not apply for store cards. You can read more about this on our post titled “Three Major Drawbacks of Store Credit Cards.”

What do credit cards and student loans have in common?  If used sparingly and paid off per your agreement, they can actually help you build your credit score.  A good credit score can help you rent an apartment, buy a car, get a job and more – all of which can be really important when you graduate.

Want more credit card tips?  Search this blog.  Have any credit card stories you’d like to share? Comment below!

10 thoughts on “Credit Card Use Declines Among Students

  1. I’m glad that legislation is making a step in helping student avoid sinking further into debt. This allows them to focus on paying off student loan debts before racking up another bill with a credit card. The Credit Card Act of 2009 has set provisions that make it harder for students to attain a credit card. This is very beneficial to the financial well-being of students.

  2. I feel that the credit card act was a very crucial piece of legislature. Although I don’t feel that it is the most important piece of legislature in recent history; I do feel though that is a very important legislature that is a big step forward to protecting consumers rights. It is nice to know that even with today’s bureaucratic politics that the government is still looking out for the needs of the people, and willing to limit the powers of larger corporations.

  3. From doing a little research of different monetary institutes, I have found that for college students especially because of the high amount of tuition, credit unions are most likely the best option. They have better rates.

  4. I applaud our legislation for enacting the credit card act. It’s about time the credit card companies have restrictions on them regarding their practices towards cardholders (young adults and students in particular.) As a college student myself, I experienced some of the provisions enforced by the act when I applied for my first credit card and found that the process made me both financially aware and mindful of the responsibility of maintaining a line of credit.

  5. I applaud our legislation for enacting the credit card act. It’s about time the credit card companies have some restrictions on them regarding their practices towards students and young adults in general. As a college student myself I experienced some of the provisions enforced by the credit card act when I first applied for a credit card, and found that the process made me more financially aware of having a line of credit and the responsibility needed to maintain it.

  6. I think the Credit Card Act was one of the most important laws to be passed in recent years. College is exactly not the time to be allowed to screw up your financial life. The lure of the card without (for some students) the responsibility of a full time job, paying your own rent, and/or using student loans to pay off credit cards creates a terrible environment for beginning a sound financial life.

  7. I believe it is a good idea for credit cards to be harder to get unless you have a cosigner when you are under the age of 21. Credit card balances can easily rack up when spending money in college especially. Also, limiting to just one credit card is very smart. There was a point in which I had three credit cards and you don’t realize how fast things add up. Also, keeping up with payments could be harder to keep up with that your credit score can be affected.

  8. Growing up my family treated credit cards like grenades–they are powerful and should be handled with extreme caution. I don’t have a credit card yet as I’ve been avoiding it because of my own anxieties. But when I do I’m only having one, and I’m only using it to build credit. I might just put gas on it since many companies offer cash back for that.

    I’m not usually in favor of our government “nannying” us, but it’s clear this act helped out students.

  9. Credit cards can either be positive for your finances by building your credit score or can be extremely negative by obtaining too much debt. When going shopping as a college student it is so easy to be tempted to apply for a credit card at your favorite store to save a certain amount of money or get rewards, but DON’T give in! Honestly it is worth paying the few extra dollars than having to get yourself out of debt. The new act that was passed about the age limit of receiving a credit is possibly one of the best things that can happen to college students. It is so easy to spend money by using a plastic card but when the statement comes in and you don’t actually have that money to pay off the card then you are in trouble. On the positive notes, if you are truly educated on good money habits and have a budget for your spending and know how to save money then a credit card could lead you into buying your new house or car when you get out of college!

  10. I was initially extremely terrified of owning my own credit card. Because of this my first 2 years in college I had a credit card with my name on it, but my mom was the main person on the account. This allowed me to have an understanding of using my credit card for only important purchases and she would then pay it off monthly. Since then, I have now attained my own account with a small monthly allowance. Though I was still scared, having been to taught to only use it sparingly, has afforded me the financial intelligence needed to efficiently use credit cards-simply for the accruance of building a good credit score.

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