College Students Now More Responsible With Credit Than Their Parents
For many young adults, the college years are a time for overindulgence. Students tend to engage in too much eating, drinking, all-night studying, partying, and credit card debt.Here’s some great news for parents: 
recent research indicates that college students may be becoming more responsible when it comes to credit card usage -- perhaps even more responsible than their parents!
Experian, the credit reporting company, conducted a study which revealed that among adults between the ages of 18 and 25, growth in credit card debt has shrunk to a miniscule .4%. That’s down sharply from a 2.4% growth rate in 2009 and a whopping 12.3% rate in 2008.
So this begs the question: are today’s college students demonstrating a greater level of responsibility with their credit card habits than their parents (or upperclassmen) did?
She looks responsible – but IS she?
One thing’s for sure: there are several factors that are influencing how college students approach credit cards today.
Minimum age requirements. The Credit CARD Act of 2009 decreed that no company may issue a credit card to an individual under 21 years of age who does not have an adult co-signer. Predictably, credit card usage by college freshmen and sophomores has plunged dramatically since the legislation went into effect.
No credit card promotions on campus. Another provision of the CARD Act was the prohibition of credit card promotions on the campuses of all institutions of higher learning. This was designed to eliminate the temptation of college students succumbing to “impulse registrations” and signing up for a credit card that they weren’t ready to handle. (It should be noted that credit card companies can and do market to college kids at off-campus locations.)
Credit cards tailored to college students. Credit card companies are doing a better job of marketing certain products specifically to college students which can help cardholders establish smart credit habits. For instance, the Journey Student Rewards card from Capital One gives students access to software which can let them track their account and learn about how credit works. And the Citi Forward card for college students offers rewards points to cardholders when they pay their bills on time and stay under their credit limits.
Whether college students are being more responsible with their credit, or market conditions are causing the drop in credit card debt, is open to debate. Plenty of students are still making too many frivolous purchases with their credit cards. But when these students’ parents look at all of the current trends, they may discover that credit card debt may be one less thing they need to worry about.
Now if credit cards could only keep students from falling asleep in class.
Image credits: salmonellablog.com, gobankingrates.com, studentfinancials.info
5-7-2012
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