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College is the last care free step before real life begins, or at least it should be. Students should be
able to go to sleep each night with the only pressing responsibility being the English exam
tomorrow morning. They should still get to live in a world where although they can't afford much
more than the occasional late night drive through Taco Bell or downloading the latest hit single, at
least they aren't worrying yet about paying a mortgage, most forms of insurance, utility bills, or the
college loan that is allowing them to get an education.
Unfortunately, for many college students this is not the case. Many are already burdened with
financial pressure because they are accruing credit card debt, in some cases over $7,000 worth of
it. Increasingly, students are even coming to campus with credit card debt in hand. Consolidated
Credit Counseling Services Inc. reports that 20% of freshman got their credit card in high school
and nearly 40% sign up for one in their first year at college. With the abundance of on-campus,
mail and Internet card offers giving low introductory rates, freebies, and bonus airline miles, it's not
surprising to find that according to a 2001 Nellie Mae study 83% of all undergraduate students
have at least one credit card and carry an average balance of $2,327.
The problem of high credit card debt has many implications for a student. Some end up dropping
out of college all together so they can work full-time just to pay credit card bills. If they are able to
stay in school, but have in the process ruined their credit rating, it can affect their ability to rent an
apartment, afford insurance and even get the job that will help them to pay off their debt. Even
relationships suffer as a result of financial stress. There is also a psychological affect on students.
The stress can lead students into depression, and in a few cases has been a contributing factor to
suicide.
Of course it hasn't always been like this. According to Dr. Robert D. Manning, Professor at
Rochester Institute of Technology and author of Credit Card Nation, in the late 1980s student
credit card limits were around $300-$500 and parents were required to co-sign. But when credit
card companies began making a lot of money during the 1991 economic recession, they started
looking for new markets and found it in the student population. Issuers dropped the co-signing
requirement and started raising limits, which, when combined with parents' increasing financial
pressures and higher costs of education, gave students a way to fund themselves through college.
And students are an easy market to tap into. In his article "Credit Cards on Campus," Manning
writes, "Credit card companies encourage fantasies of easy money because students are so
profitable: teens have financial naiveté, high material expectations, and responsiveness to
relatively low-cost marketing campaigns, high potential earnings, and future demand for financial
services."
Credit companies advertising to the vulnerabilities of young students is not the only factor that

2. goes into the current trend. Most students simply have not received the education in personal
finances and credit card management that they need to meet the onslaught of offers. According to
Consolidated Credit Counseling Services, Inc only 15% of high school students take a personal
finance class. And, according to the Jump$tart Coalition for Personal Financial Literacy, a non-
profit organization which promotes financial literacy at the K-12 level, parents for a variety of
reasons are not talking to their children about the privilege and responsibility that goes along with
using a credit card.
Dr. Carol Carolan, Executive Director and Founder of the Center for Student Credit Card
Education, says that the single best thing parents can do to help their children avoid the pitfalls of
credit card debt is educate them. Parents need to talk to their children about it early on and
regularly. Dr. Carolan suggests the following tips for parents.
When a child has reached an appropriate level of maturity and understanding of personal
finances, co-signing a credit card can be very beneficial. Get a credit card with a low limit and no
annual fees (visit the "Card Reports" section of our website to comparison shop for student credit
cards). Discuss with your child the details of the credit card including interest rate on purchases
and cash advances.
Review all the expenses every month. Show your child what finance charges might apply if the
balance is not paid in full and on time. This includes any interest, fees, and penalties. Be a good
role model.Experts don't all agree on the appropriate age for a first credit card. Dr. Manning, for
instance, argues in his article Credit Cards on Campus that having them at an earlier age may
actually result in fewer debt problems later on." Other experts argue that waiting until the junior or
senior year in college is best. The bottom line parents need to realize is that once students reach
the college campus, they will be inundated with credit card offers and will be able to get a card
regardless if they are supported financially solely by their parents.
And talking with students involves more than mere calculations of fees, interest rates, and
balances. Students need to understand the messages they receive through advertising, the
difference between a want and a need, as well as the lure of money. Give students a healthy,
realistic perspective of money and material possessions and they will be better equipped to make
wise decisions.
Universities and colleges play a huge role in the current trend of high student credit card debt.
Some invite credit card issuers onto campus because they receive revenue as well. But others are
starting to recognize the problem and are restricting the activities of credit card companies on
campuses. Manning states in his book Credit Card Nation, that "During the academic year 1999-
2000, over 400 colleges and universities formulated official policies against on-campus credit card
marketing and nearly 600 other schools are considering similar restrictions."
Some institutions like Rochester Institute of Technology (RIT) and the University of Central (UCA)
Arkansas are even beginning to require classes in personal and consumer finances. Mary Ann
Campbell, CFP, professor of personal finance at UCA and professional speaker with Money
Magic, Inc., has a mission to educate students, educators, and adults about money. She is
currently working on her dissertation about college students and credit card debt. Campbell is
researching the best methods of reaching college students through a high impact presentation
warning them of the perils and privileges of plastic. Like other experts, Campbell is not against
students having credit cards. In fact, she says it is easier to get one as a student and can help

3. them build the good credit history needed after graduation. But students do need to be educated.
Campbell gives the following tips and reminders for students.
There is true magic to compound interest when it's working for you (as in an investment or savings
account), but true devastation when it's working against you (as in credit card debt). Even when
you buy something on sale, the interest alone can double the price. Account for everything. Keep
records of each credit card including the interest rates, fees, balances, due dates and purchases.
Campbell suggests a good way to do this is to setup a spreadsheet in Excel. This will also keep
you organized so you don't miss another payment. The only way to get out of debt is to stop
charging and always pay more than the minimum. If more than one credit card has an outstanding
balance, then begin paying off the one with the highest interest rate first, then go to the next
highest interest card, and so on. If in trouble, talk about it with someone you trust and respect.
This could be a parent, teacher, or friend. Hiding it doesn't make it go away. Credit scores can
make all the difference in the world for good or bad. It can take many years to recover from a bad
credit score. Learning to use credit cards responsibly is a gift. Seek to gain knowledge and
wisdom. Credit is a privilege and it is the student's personal responsibility not to let it become a
peril. Campbell says, "The magic comes from you." While in college, students need to think
outside the box, but live financially within the box. Credit cards can be an invaluable tool for a
student. While providing security and convenience, if used wisely a student will build the good
credit rating that is needed to secure other consumer loans, jobs, and lower insurance rates after
graduation. Dwayne Blew, a member of CreditBoards, a forum dedicated to credit issues, is one
example of a student who didn't buy things he didn't need and paid his credit card balance in full
each month during college. Now he is reaping the benefits of a good credit score. Dwayne says,
"One of the reasons you're going to college is to improve your lifestyle once you graduate. After
putting so much effort into school, why let something small like a credit card end up ruining it all?"
Many excellent resources exist to help students both avoid and get out of the credit card debt trap.
Comparing credit cards is an important step in finding the best one to suit your needs.
CardRatings.com makes this search simple and easy by allowing you to research the best rated
student credit cards. Consider utilizing the services of a nonprofit credit counseling service. Be
very careful when considering a credit counseling service, though, as many counseling services
are scams, including nonprofit services. Consolidated Credit Counseling Services, Inc. has a free,
downloadable Budgeting Guide for students. Dr. Carolan has written a booklet titled The ABCs of
Credit Card Finance - Essential Facts for Students that can be ordered online and it will be mailed
to individuals free of charge.Message boards or forums are a great source of information. You can
post questions, concerns, or comments and a real person will respond with real life information.
Campbell says they are a gift and can even become a support group. You can join the
CardRatings.com Message Board for free. Even if your school doesn't require a personal finance
class, take one if it's offered.
http://www.debtsmart.com/, created by Scott Bilker, author of the best-selling books Talk Your
Way Out of Credit Card Debt, Credit Card and Debt Management, and How to be more Credit
Card and Debt Smart, contains several tools to help consumers deal with credit card debt. The
financial decisions students make in college have a long lasting impact on their future. They are
learning how to use and manage various financial tools vital for life in the "real world". When used
wisely, credit cards are one tool that can open the doors for a life unencumbered by financial
burdens.

4. Amy L. Cooper-Arnold has been a staff writer for http://www.cardratings.com/ since 2004. Her
articles have been republished by respected publications throughout the country, including Young
Money Magazine, E/The Environmental Magazine and About.com. Amy recently graduated with
honors from Austin Peay Univ. and is currently taking graduate-level classes.
Article Source:
http://EzineArticles.com/?expert=Amy_Cooper-Arnold
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To Compare Credit Card Offers and Find the Card That's Right For You, please visit:
www.CreditResourceUSA.com
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