Credit Cards World

According to the 2004 study Undergraduate Students and Credit Cards by Nellie Mae, a Sallie Mae company, the average credit card debt for a college student is at its lowest since 1998.

The Average Credit Card Debt for a College Student Varies

The average credit card debt for a college student varies depending upon the year in which a student is enrolled. According to the same 2004 Nellie Mae study, the most recent year the study is available, credit card debt varies from freshmen to seniors.

College Students and Credit Cards

As high school students graduate and turn 18, they get bombarded with credit card offers through regular mail and email. This is why it is no surprise that:

• 78% of college students reported obtaining their first credit card between the ages of 18 and 19.
• 23% of college students reported getting their first credit card after the age of 20.
• 43% of all college students hold an average of 4 or more credit cards.

The most surprising statistic by far is that 65% of 18 to 19 year olds, the average ages that college students reported getting their first credit card, failed a financial literacy test.

The Purchases

The Nellie Mae study breaks down the main purchases made by students into two groups: Direct Education expenses and Non-Direct Education expenses

• Direct Education Expenses
  • 74% of college student use credit cards to purchase general school supplies like notebooks, pens, paper, lab materials and calculators.
  • 71% used a credit card to pay for books.
  • 29% of college students paid for transportation costs to and from school and other fees such as lab fees, with a credit card.
  • 24% used a credit card to help pay for their tuition.

• Non-Direct Education Expenses
  • 71% of college students use a credit card to pay for food.
  • 68% used credit cards to pay for clothing.
  • 49% swiped their credit cards to pay for cosmetics, including toiletries.

The Debt Effect

College is hard enough. For most students, it is their first time away from home and being on their own. For others, they are moving out of state, away from friends, family and everything that is familiar. This anxiety already exists before they set foot in classroom. credit card debt adds to the already high anxiety level of college students.

• 34% of college students work 10-20 or more hours a week during the school year in order to increase disposable income and pay down debt.
• 31% work 20 or more hours a week to increase disposable income and pay down debt.
• The amount of a student’s credit card debt directly correlates with their anxiety levels. The higher the credit card balance, the higher the students anxiety level. The higher the debt and resulting anxiety level, the more hours they work.
• Some students cut down on class loads or drop out of school altogether in order to pay off credit card debt.

Beyond Credit Card Debt

Americans in general, carry an average credit card debt of $8,500. This number may make the average amount of credit card debt a college student carries of about $2,100 seem like a small number in comparison. After the excitement of graduation fades, college students not only have to consider the credit card debt they have incurred over the past four or five years, but also, their student loan debt.

• Students attending 4-year public colleges and universities
  • 62% have student loans
  • The average loan amount per student is $17,000
• Students attending 4-year private colleges and universities (non-profit)
  • 73% have student loans
  • The average loan amount per student is $22,000
• Students attending 4-year private colleges and universities (for-profit)
  • 87% have student loans
  • The average loan amount per student is $28,000

Some Credit Card Management Tips

Getting out of $2,100 worth of credit card debt is relatively simple; it just takes a little will power and financial discipline.

• Pay them off every month – Only charging what can be paid back at the end of the month. This will prevent card balances from accumulating and carrying forward to the next month, resulting in interest charges and a higher monthly payment.
• Pay more than the minimum monthly payment – Making only the minimum monthly payment will not help you pay down your credit card balance. Shoot for paying at least twice the minimum monthly payment.
• Do not make a single late payment - The second a payment is late, even by a day, most credit card companies will change the introductory interest rate to the default rate, which can be as high as 32%.
• Carry only one credit card - The average college student has 4 credit cards. That means 4 balances and 4 monthly payments. Carrying only one credit card will reduce the risk of college students charging more than they can afford, making late payments or missing payments.
• Get credit card debt help - Consider going through a debt management company or seeking out the advice of a financial advisor regarding ways to elminate and reduce credit card debt.

A College Degree is Worth it

A study The Big Pay Off: Educational Attainment and Synthetic Estimates of Work-Life Earnings conducted by the U.S. Census Bureau proves that getting a college degree pays off by dramatically increasing average life-time earnings.

Tags: College Credit Card, Debt, Student Credit Card