An informal survey conducted by a university based in the U.S. discovered that more and more students are relying on credit cards to pay for school-related expenses. According to the latest study on credit card usage by college students, a large majority of the student population now own credit cards. In comparison, only a handful of freshmen owned and maintained cards two decades ago, experts say.
Across the U.S., an estimated 84 percent of all students own at least one credit card. In some colleges and universities, however, the figures are much lower. For instance, some schools report that only half of the enrollees have credit cards. Despite the relatively low figures, the average credit debt by students has increased significantly in recent years. A study conducted by Sallie Mae, one of the largest credit card firms catering to students, found out that the average college freshman charged up to $2,200 in education related expenses to credit cards in 2008. That figure is 134 percent higher compared to four years ago.
Experts say that on average, college students owe some $3,173 to credit card companies, topping the $2,169 average four years ago. Many analysts believe that the higher debts are due in part to more educational expenses. Credit experts also point out that students are more likely to charge other purchases to their cards because of the new expenses they deal with.
Economists explain that aside from school-related expenses like tuition fees and books, college freshmen are also becoming increasingly reliant on credit cards to pay for gas, new clothes, and even drinks. This has resulted in higher credit debts across the U.S. Also, analysts say that younger cardholders are easier targets for retailers and marketing strategies. Most college freshmen often purchase new electronic gadgets and the latest in fashionable clothing to avoid being ridiculed by their peers. Experts say that this has led to an unprecedented increase in the average debts of students.
The federal government has already stepped into the issue with the pending implementation of tougher credit card rules early next year. Even so, financial experts caution that college students and younger cardholders must learn how to avoid exploiting their credit cards. They warn that if left unchecked, constant use of credit cards can have undesirable effects on credit histories and ratings. Analysts also point out that until the implementation of the tougher laws, students are at the mercy of the card companies.