For many students just starting their college years, the idea that they are moving on to a more mature, more adult form education is probably greeted with excitement and delight. Along with the more mature educational setup comes a deluge of mature decision making as well. One of the most important decisions that a student will make when in college is whether to get a credit card or not.
Having a credit card can be a liberating and empowering experience for a college student. The combination of the freedom to buy and the responsibility of paying off the monthly bills is another gateway to adulthood that college students want to experience. However, the unfortunate truth is that, like their adult counterparts, college students who get credit cards more often than not end up deep in debt.
For many students, the lure of using a credit card for impulse purchases can be too much. As a result, many college students find themselves in debt after using, or over-using their credit cards for superfluous expenses such as dining out, gadgets, holiday trips and the like. Because college students are often a demographic constantly exposed to peer pressure and the need to fit in, it is not that hard to imagine how unwise many of their purchases would be.
One would think that credit companies would consider college students as risky borrowers and not extend credit to them. However, the reality is that credit companies are doing everything they can, from giving away t-shirts to connecting with alumni associations and even universities to entice students to apply for credit cards from them. Why? Credit card companies know that when college students get into debt, the most likely scenario is that parents pay it off for them. Also, college students who maintain credit cards and carry balances in them will most likely turn out to be long time customers, basically because it will take them a long time to pay off the balances of their purchases from college.
As it turns out, the credit card companies are right about their expectations of college student credit card use. According to recent reports, the average outstanding balance among college students is around $8,000.00. Consider that 84% of college students carry one card at a minimum and many carry four or more and you can see how much credit card companies are earning from students.
This is why credit companies do not want to lose this particular market segment, something which is bound to happen once the credit card bill is in place. Credit companies probably will fight the laws of the credit card bill and will find loopholes to get through it. The best thing that a college student, and his or her parents, can do to is not to get a credit card in the first place or, if they do get a credit card, to use their credit cards wisely.