Parents Urged to Control College Students’ Credit Spending

Credit experts are advising Americans to rein in the credit purchases of their college-bound children. According to industry analysts, students are racking up substantial amounts of card debts due to mismanagement and lack of discipline when it comes to regulating card use. The task of managing credit cards often fall to parents who, experts say, have to teach their children the proper way to control credit spending.

According to a recent report by Sallie Mae, one of the largest financial institutions catering to college students, 84 percent of all college freshmen have had at least one credit card. Slightly more than half of those surveyed admitted to owning four or more cards. The same study also revealed some startling information. For instance, the average balance that students have is $3,173. In addition, undergraduates on average owe some $19,000 or more to lenders and creditors by the time they graduate from college.

Three out of four college freshmen revealed that they carry monthly balances with some 60 percent expressing surprise over how much credit debt they have acquired. Some financial analysts say that these cardholders are the card companies’ dream clients – financially irresponsible, impulsive, and unwilling to settle balances regularly.

A new law expected to take full effect next year aims to prohibit card companies from issuing new cards to Americans under the age of 21. Card firms will also be banned from giving out freebies like shirts, caps, or even electronic devices on campus fairs to get new applicants to sign up for credit cards. Even with the new measures, some credit experts are still torn between government-sponsored regulations and proper credit card management.

Analysts say that while the tougher rules can help ease the burden of card debts for younger cardholders, it is still up to consumers, particularly the parents, to warn their children on the risks involved with credit cards. For instance, consumers can first take on their children as supplementary cardholders to monitor how they plastic. This can then lead to the next logical step in providing for financial independence – their first credit cards.

American parents should consider their college-bound children’s financial needs and the purpose of acquiring a credit card. Some cards can be used to purchase gas or for groceries. Other cards, on the other hand, have relatively low credit limits to discourage overspending. However, experts warn, having a credit line that is too low can mean lower credit scores for young cardholders looking forward to building credit histories.