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How much debt did you have when you graduated from college? Did you have a mound of college loans to repay? You likely had credit card debt as well. From buying pizza for a meal to purchasing those cheat guides to help you to get through that upcoming test, there's plenty of reasons students turn to credit cards in school. Credit cards in college are common, but this could be hurting you rather than helping you.
50 Percent Graduate with Credit Cards
While more than 70% of today's college kids appreciate the value of a higher education and believe that getting a university degree will enable them to make more money and have a better career, they are currently in a tough financial state. According to recent data compiled and analyzed by Sallie Mae, the agency that provides most of the student loans in the USA, more than half of all college students have multiple credit cards. These students have credit card debt, and some students graduate into a weak job market with debt exceeding 10 to 20K.
Should College Kids Use Credit?
It is a good idea for college students to use credit cards. There are real benefits in doing so. Experts at Sallie Mae remind students that the real purpose of using a credit card during college years is to gradually build up a good track record of credit history. That way after graduation when you are out on your own without the support of cosigners like parents you can apply and successfully get your own credit cards. Landlords are also prone to check your credit history, so building one during college years prepares you for all sorts of financial responsibilities while enabling you to have an active financial life on your own. However, it is understandable that young people may feel the need to rely on plastic to pay for their monthly expenses, schoolbooks, or other necessities.
Paying for School Isn't Easy
That's because as researchers at the University of California discovered, many students do not have the luxury of strong financial support from the adults and family members in their lives. Their recent study found that nearly 5% of all student reported that their father was unemployed. Meanwhile more than 8% said their mothers are not employed. More than half of students use loans to pay their tuition.
To avoid this, college students should take steps to choose the right student credit cards and use them minimally. Doing so will help to provide them with the financial access they need without overdoing it later.