Students Credit Card Debt is on the Rise

College students are constantly bombarded with credit card offers. Banks are becoming more creative and persistent in their efforts to snag new customers. They send hundreds of pre-approved letters or offer gifts like T-shirts, Frisbees, pizza and even iPods just for filling out a student credit card application. But sometimes credit cards can become dangerous. College students, who don't have sufficient financial experience and money management skills, can accumulate large debt. That can hurt them after graduation: as a result, many seniors are postponing marriage, home ownership or having kids.

Financial experts say that nearly 91% of students have applied for at least one credit card by the time they graduate from college. About 56% of college-aged credit card holders have four or more plastics. The reasons why student credit cards have become so popular are obvious: they offer attractive low rates, reasonable fees and special rewards programs matching young people's interests and lifestyle. Student credit cards also come with discounts on goods students buy most often: books, CD's and apparel.

Keeping a credit line and paying it off each month can actually be one of the best things that students can do to ensure their successful financial life in future. Credit cards let them build a solid credit that can serve them for years to come. It will help seniors get a good job, rent an apartment or save hundreds of dollars on a car purchase.

The majority of college students can use their credit cards sensibly. They control their expenses and pay their bills on time. However, there are always people who abuse their credit lines, and students are no exception. The temptation to use a credit card as if it is free money is a high risk. Many students consider plastics as a symbol of long-wanted maturity and unlimited purchasing power. The most common mistake that they make is to buy all things that they couldn't afford before. Such students pay less attention to the price of the goods because they think that they have got enough money on their credit card.

Having high balances may lead to negative consequences for your future financial life. All financial behavior, good or bad, is reflected in your credit report. Having a bad credit will give you a hard time to buy a car, take a loan, rent an apartment or even get a job. A lot of students do not know that some employers consider credit reports to evaluate their responsibility.

According to the latest financial researches, one of the main reasons of growing student debt in the U.S. is the decline of financial literacy among students: only 48% of the test's questions were answered correctly. In 1997, the number of correctly answered questions was 57%. The problem-solving ability is also an important factor in students' abilities to grasp and apply financial information. Only 49% of students correctly indicated that people who make the minimum payment will pay off their debt longer than people who pay more than the minimum amount.

Trying to reduce the number of student defaults, credit companies introduce special educational programs for college students. They teach young people necessary financial skills, for example how to manage credit card debt effectively or protect themselves from credit fraud. Parental guidance is also necessary for students to avoid costly mistakes and manage their finances responsibly. However, parents and other adults tend to shy away from the topic. The use of credit cards is an area that doesn't get much attention when it comes to getting ready for college. Typically, parents and their children spend more time looking for a good computer or dorm furnishings, although a credit card use will have a major impact on his or her future.

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