65% of College Students Have Credit Card Debt According to Survey

College students are using their credit cards to purchase clothing, personal items and other living expenses, according to a survey recently conducted by Smith College and funded by Oppenheimer Funds, Inc. The survey showed that 65% of college students have credit card debt and half of those charge their cards to the limit. Many students never pay their balances in full or even know the APR (Annual Percentage Rate) of their credit card.

Lauren Coulston, vice president, advocacy and training manager at Oppenheimer Funds, said: “While the cost of a good education can be a burden, it shouldn’t be one students’ have to carry for a lifetime. A discussion of smart credit card use is a great start toward financial success.”

The survey found financial knowledge plays a significant role in effective credit card management. Therefore it is important for parents to involve their students in discussions concerning how to prioritize credit card debt, credit card interest costs, how to maximize credit card payments and to develop new habits such as:

• Create a budget for living expenses and stick to it.

• Plan all purchases and never go into a store without a list.

• Wait until cash is available to buy big-ticket items.

• Don’t shop for fun and forget the mall for recreation.

• Use credit for emergencies only, not to pay for day-to-day living expenses.

• Pay off balances in full. If you cannot, at least make sure you have the credit card with the lowest APR possible.

• If you must incur debt to pay tuition and fees, evaluate all options including student loans and financial aid, which typically carry better financing terms than credit cards.

Coulston also noted: “College age students don’t always think about the long-term implications of how making a credit card purchase today can impact purchasing a home, paying off student loans or meeting financial goals in the future. It is critical for young adults to learn about financial planning early so that they are prepared to handle increased responsibilities such as managing credit card debt.”

More details about this survey can be found at http://www.smith.edu/newsoffice/releases/05-007.html.