Why College Students are Horrible With Credit Cards?

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This is a guest post from MD of Studenomics. A blog where you can find the best credit cards for college students or learn about college life in general. MD just graduated (without debt I must say). So he is probably one of the rare exceptions in today’s world. But I guess he has been keenly observing his fellow peers racked up debt in college. Let’s see what he has to say.

Before we get into the post we should address the question: are college students horrible with credit cards? I would have to say that the answer is unfortunately yes. According to Generation Earn, every one in three college students carries a credit card. The average amount owed is $495. On top of this empirical data it’s not a secret that handing over a plastic card with money on it to an 18 year old is not a good idea. Even with the new Credit Card Act in place, a student under 21 just needs a proof of income or a co-signor. Both are not difficult to provide. Now before I get off topic let’s look at why college students are horrible with credit cards:

Lack of information.
Where can college students turn to learn more about credit cards? How many students really go online to become more financially literate? The reality is that the average college student applying for their first credit card simply doesn’t have the information needed in front of them to be a conscious credit card user. This lack of information could hurt them in the future.

Not caring enough.
In between trying to cram for midterms and figuring out which kegger to attend, your credit card bill might be just the last thing on your mind. I don’t want to blame college students nor do I want to blame credit card companies. I just feel that there’s a disconnect somewhere.

Instant gratification.
Our generation has not been raised to be patient. When we want something we want it right now. We’re all guilty of this. I’ve regretted many purchases simply because I didn’t delay them a little bit or conduct more research. Delayed gratification is rare in the credit card era. We either justify our purchases or we simply don’t worry about how we’ll pay for that new pair of Nike Shox. As the credit card bill rolls around, the harsh reality starts to hit that this purchase is going to have to be paid for eventually.

I don’t want to harp on the negative so I’ll stop there. Now that we know why college students can be horrible with credit cards, let’s look
at a few solutions for the parents reading this:

Keep the limit minimal.
If your college-aged kid has not proved to be financially responsible then you should ensure that their credit limit doesn’t exceed the standard $500 amount. A friend in college some how managed to convince his parents to extend his credit card limit to a few thousand dollars. Let’s just say that it wasn’t a good idea by any means. I think that $500 is a good starting point for all new credit card users until they get the hang of it.

Have a joint-credit card.
My Mom has a joint-credit card account with my 20-year old brother. A join account will force this person to always think about you before they purchase something. Do you really want your parents seeing how many times you booze in a week or how often you go shopping?

Simple education.
This one scary calculation on eliminating credit card debt can be discouraging enough. When the professor ran this calculation I could see people with Ed Hardy shirts and Gucci shades on dropping their jaws. It’s scary to think about how much money our crap is going to cost us in the long run. This is often the education that a college student needs, not some boring lecture.

There you have it. We now understand why college students are traditionally horrible with credit cards and what you can do about this. Feel free to fill in any points that I missed.

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