Straight Talk on College Credit Cards

With college acceptance letters tucked away, and high school seniors dreaming about being on campus next fall, the topic of conversation in U.S. households could turn to credit cards.

Specifically, how to get the best one for your college-aged son or daughter. Before you make a decision, though, you’ll have to separate fact from fiction.

First, arm yourself with some key statistics. According to the Federal Reserve Bank of Boston, the average age of a first-time credit card owner is 20.8 years — prime college years, demographically.

Some other key college-aged credit card owner data include:

  • About 84% of students have credit cards, an increase of approximately 11% since the fall of 2004, according to 2009 figures from Sallie Mae.
  • Only 2% of undergraduates had no credit history (also from Sallie Mae).
  • Sallie Mae also says that about 50% of college undergraduates had four or more credit cards in 2008 — up from 43% in 2004 and just 32% in 2000.

Now back to the “fact or fiction” issue. While credit cards are increasingly a common occurrence on college campuses, some myths still endure. Let’s puncture a few of the most common ones:

Who’s responsible? Despite conventional wisdom, it’s not the parents who are responsible for their college-aged kids' credit card bills. As long as the collegian is 18 or older, and the parent didn’t co-sign for the card (a big caveat), then all debts accumulated on the card belong to the student.

College cards don’t translate into big balances. Not exactly. A 2009 Sallie Mae study reports that the average college-aged credit card owner’s debt balance is $3,173. That’s 46% higher than the $2,169 figure back in 2004. As most college students don’t have full-time jobs, that’s an alarming figure.

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