Who doesn’t dream of their child graduating from high school, earning a college degree and landing an amazing job with a hefty paycheck? What’s not part of that dream is the potential for debt that takes years to pay off. No one wants to see their child have large loan payments with mounting interest.
According to a study conducted by College Finance, debt after college is a very real challenge—and student loans aren’t the only contributing factor. Credit card debt can also play a role.
If you have a child who’s ready to start their college journey and have concerns about their potential credit card debt, you’re not alone. Gaining knowledge and teaching your child to make smart credit decisions can help.
Why College Students Get Credit Cards
Over half of college students apply for credit cards to build good credit. When used wisely, credit cards can help students graduate with strong credit scores, which can, in turn, make it easier to get apartments, rent cars, buy homes and even get jobs in some cases.
However, many students see credit cards as a way to spend money impulsively. It’s easy to tap a card to order takeout, grab coffee or make a spur-of-the-moment purchase. These students often only pay the minimum payment on their monthly bills, which prolongs their debt well beyond the foreseeable future.
How many college students have credit card debt?
A recent study by College Finance found that almost 65% of college students have credit card debt. Of those with credit cards, 57% said it is their preferred method of payment, however, 53% of students said credit card debt is the type of debt that causes them the most worry and concern.
How much credit card debt do they have?
Student credit card debt can be a problem, even if they don’t owe a lot of money. The average student credit card debt is $3,280, but the average credit card limit is only $3,568—meaning students are using up a lot of their available credit.
Make a Credit Card Work for Them Instead of Against Them
Most college students are excited about their newfound independence and want to meet their needs on their terms. When used wisely, a credit card can help a student through college and beyond without adding to their debt. The following suggestions can help make this dream a reality.
- Make sure they’re only charging as much as they can pay off fully each month. This avoids interest charges that become more expensive every month that they aren’t paid off in full.
- Set up a monthly spending budget with your child before using the card. This will help keep track of purchases and avoid overspending.
- Review the credit card statement with your child each month. Credit card companies can make mistakes. If you see any charges that you or your child didn’t make, call the company and contest those charges. Reviewing the statement together also helps you keep an eye on personal spending.
Review their credit report a few times a year. Stay informed on your child’s credit usage. Visit AnnualCreditReport.com to order free copies of your credit reports.
