A recent study by Sallie Mae showed 21 percent of college freshmen had a credit card in 2012 And among college seniors, the number jumps to 60 percent. While this probably isn’t surprising to many, it is something that’s worth taking a closer look at.
With the cost of college tuition on a seemingly never-ending increase, student loan debts keep rising as well. Without the proper education in good credit management, college students could find themselves in a deep financial hole upon graduating.
“Getting a credit card in college can
start building a good credit history.”
However, too often it results in a downward spiral of spending, debt accumulation and more borrowing to cover expenses.
As we all know, college is an expensive endeavor. On top of tuition, there are the text books and other materials required for class. Students who use a credit card to pay for these can easily see their balance shoot through the roof and may even find their credit limits maxed out.
This could lead to taking out more student loan debt in an effort to pay down the credit cards, and the vicious cycle begins.
Instead, many credit counselors suggest having students become an authorized user on their parents account for the first year or two of school. This way they are able to build good habits under the supervision of their parents – who, it is hoped, will teach them good credit management.
After that, having a card of their own may be easier for them to manage and use responsibly.
As a final word, establishing good credit habits when you’re young has lifelong financial benefits. A good credit history means better access to a well-paying job, cheaper insurance, easier access to renting an apartment, better interest rates, and the list goes on.
Source: Salliemae.com. Photo source: college-path.com.
Editorial Note: Opinions expressed here are the author's alone, not those of any bank, credit card issuer, airline or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.