56% of college seniors have four or more credit cards.
Let that sink in for a moment.
At first, this statistic baffled and confused me. With two credit cards, I feel like an oddity amongst the people I know. I’m a college senior, but I can only think of a handful of my friend that even have one credit card, let alone four!
But then it hit me – I have a biased point of view. My school does not allow credit card companies to set up tables on campus. There’s no one here hawking out free T-shirts, Frisbees or candy bars in exchange for all of your personal information.
This is purely anecdotal, but from what I’ve seen, not allowing credit card companies on campus severely cuts down on the number of credit cards that students have. It also cuts down on the number of students that get into debilitating credit card debt while in school.
An advisor at one major university says that more students drop out due to problems with credit card debt than academic disqualification. Dr. Robert Manning, a professor at my school and author of the book Credit Card Nation, says that between 7 and 10 percent of college students will drop out of school because of credit problems.
But at my school, this is pretty unheard of. When I dropped out due to a combination of credit card debt, student loans, and unhappiness in my major, people were shocked. Many people had never heard of someone leaving RIT because of money problem. In fact, it was so odd, the school magazine wrote a cover story about me dropping out!
So why do other schools allow credit card tables on campus? Simple answer: money. The credit card companies pay the school to be there – sometimes big bucks for big schools.
College students who accept cards from on-campus marketers are likely to be more indebted than those who obtain cards through other means, yet they are also likely to believe that the card issuers are more reputable because they have been screened by the college.
– http://www.the-american-interest.com/ai2/article.cfm?Id=458&MId=20
I can tell you why that is – students who seek out credit cards off-campus (usually by applying online) know what we’re doing. We seek out a credit card with a better idea of what it is, why we need it, and how to use it responsibly. A student who applies for a credit card in exchange for a piece of swag is much less likely to know and understand that they are signing up for a monthly loan with a high interest rate.
There are two sides of the coin here:
On one side, I strongly urge universities to join my school in banning credit card companies from campus. Your students will be better for it, and your retention rates will increase.
On the other side, students need to educate and prepare themselves. I’ve never been an advocate of “credit cards are evil” – I liken them to guns, actually. Many people can responsibly own and use them, but it’s possible for them to do a lot of damage in the hands of someone irresponsible or uneducated about their use.
Don’t shoot yourself in the foot – learn about responsible credit card use, and get your free Frisbee elsewhere.
I’d recommend a company called Credit Card Debt Reducers for college students.
Or anyone else I guess.
They took interest and overlimit fees off my VISA account.
i own five. Two are store cards that carry no balance. One is my first cc that they refuse to bump up the limit and i use only for my cell phone bill. The other two I use interchangably, though one has 0% apr on new purchases until Jan 09.
word to the wise though. Cut it up, but dont close it out. Now with the way credit scoring works, you’re better off not closing unused cards, because they now look at the proportion of debt to credit, not the amount of debt over all.
I’m pretty sure that I had 3 at least, a Visa, MC, and Discover. Now if a particular card company ticked me off, I might cancel the card and get another of the same type. Depending on how you measure, I certainly had 4 or more cards because I found years later (on my credit report) that many of the accounts were still open and dormant.
When I finished undergrad, I had 4 credit cards. When I graduate from grad school next month, I’ll have 7 credit cards. I guess I’m one of the people who knows how to handle guns, because I’ve never carried a balance on any of my cards. I’ve also never signed up for a credit card just to get a free t-shirt even though they were all over campus throughout my college years.
Broke Grad Student’s last blog post..6 Reasons Why I Hate Cash
Good article – The credit card companies prey on college students because they are the most in need and it is common to go into insane debt just to finish college. (student loans)
I limited my credit card usage in college by always working at least part time through out.
There was no way around the student loans for me so I am working on paying them down now.
BlogDebt’s last blog post..First Short Term Goal: $10,000 in Cash Savings
I have more than 4 credit cards, and did when I finished undergrad in ’07. I don’t use them all though.
I have
-“my first credit card” – capital one visa
-a higher limit card that was the first one my parents didn’t cosign for.
-Citi Drivers Edge
-Discover Gold
-Chase small business card
-chase freedom
and store cards.
But out of all those, I only use the chase freedom and business cards. And I never, ever, carry a balance.
Having cards isn’t the problem, it’s racking up the debt that is…
L@spillingbuckets’s last blog post..Why we closed Prosper.com and opened Kiva.org
Oh, and also – Ry wishes he had dropped out of RIT… we’ve got SO many loans (no cc debt though) and he hated his major at the end. Props to you for actually doing it and not “sucking it up” to get the paper.
L@spillingbuckets’s last blog post..Why we closed Prosper.com and opened Kiva.org
Thanks to everyone for the responses – I can see where the statistic comes from! Of course, the problem isn’t with you guys – smart use of multiple credit cards is obviously possible, but the problem lies in the fact that many college students aren’t getting their cards so…. strategically. It’s an issue when someone is doing more of a “max out one card, get another” deal.
@L – Thanks for coming by my site! I wanted to let you know that I’ve been reading your blog for a few weeks, since I learned you guys were in Rochester. And to be truthful, there is an element of “just getting the piece of paper” in why I went back to RIT, but that’s a long story.
Some reasons I think cards are so abundant when vendors can set up on campus are that (a) freebies (hat? shirt? frisbee?) and insta-credit offers (free gift card, cash off first bill, etc.) are offered on an “only if you act now” basis, and it’s a hard sell to escape; (b) attractive salespeople can get attention that leaves victims socially unable to escape without awkwardness, unless they take the literature; (c) credit cards are largely a phenomenon of convenience, and the very people you want using them (if you are a card issuer) are the very people who would be loathe to struggle to find a card off-campus.
At different times I’ve had Discover (there used to be a high-roller Discover with a cash-back over 2%; the current program rotates certain purchase types like restaurants or travel and gives then 5% temporarily, which is good if you pay attention), an American Express (the Blue Cash gives me 5% on groceries, fuel, and some other common purchases and 1.5% back on other purchases, like graduate tuition and new appliances), a Chase-issued Mastercard (3% back at restaurants is great when Discover isn’t running a 5% month, and one of my favorite restaurants has a deal with Continental whereby I register my 3% card with the program and earn miles atop the 3% while I eat), a Visa issued by Capital One (for use abroad; the 3% foreign surcharge ordinarily added to V/MC bills internationally doesn’t apply to CapitalOne cards, and CapitalOne even eats the international 1% charged by the card-brand licensor). Advanta is evil, but they have a program whereby they pay 5% back on utility payments, so I auto-pay my phone and electricity with an Advanta-issued business card.
I pay every card every month. If I can avoid using a card in a month, I do — there’s no reason to use one if you can avoid the hassle of looking after the bill. The trick isn’t to spend more on cards, but to spend on cards the same money you’d otherwise not get cash back for. I mean, you were going to spend that money on electricity, fuel,. telephone … just get a kickback!
You are spot-on, though: most folks don’t spend the attention needed to game their cards. They just use them as if their pockets were deeper and are shocked to discover they owe tens of thousands in high-interest debt.
I recently blogged on Mastercard as an investment. http://jadedconsumer.blogspot.com/2008/07/cream-of-credit.html Some of my other investing ideas are also on the site. Of course, managing one’s wallet so one has something to invest is a necessary first!
One thing I’ve done when I realize I have a credit account that is really unused is to call and cancel the account. This has actually saved my bacon, as I’ve had folks try to “steal” credit accounts that I’d closed. Had I not closed the accounts, I’d never have noticed thieves having the account statements shipped to a new address and the cards filled with charges. As it was, I got a letter explaining the address change would not be honored because the account was closed, and inviting me to re-apply!
Keep up the good work!
J’s last blog post..Cream of the Cards
My parents entrusted me with a credit card right before I entered High School. By the time I got to college I didn’t really think about it anymore.
As in all things, educating kids before they’re in the thick of things is probably a good idea.
Absolutely not… I’m 1800 in debt! I’m so poor I’m willing to sell my ass on the streets.
Anyways, good post. You should check out my blog at http://collegeandyonder.org
Another great column, Stephanie. One of our investigators got his hands on one of those secret ‘afinity’ contracts, this one between Florida State University and Bank of America. There you can see the amount of money thrown at the college to allow those T shirt promotions and, more insidiously, to use the student and alumni personal information sold to the Bank by the University. In that case the proceeds didn’t even go to the college but rather their athletic booster club. All this was happening in secret while the Student Government was running a program to avoid these cards. The irony makes my head hurt. Keep up the good work. Here’s the link:
http://www.consumerwarningnetwork.com/2008/07/10/fsu-profits-off-of-student-credit-card-debt/
I made a little post, inspired by the affinity card link, on how one can game cards rewards to maximize benefits.
http://jadedconsumer.blogspot.com/2008/07/not-to-schools-credit.html
FSU’s affinity card contract certainly represents a conflict between the students and the institution selling their names to financial predators offering crummy terms. Students wanting to support their schools have better options.
Keep up the good work!
J’s last blog post..Not To A School’s Credit
Hey Stephanie, that is CRAZY that 7 to 10% drop out of college for credit reasons alone! It makes sense though I think it’s the stress of being able to afford college… not easy, especially today!