Credit cards are a common purchasing tool in our consumer-driven society. They are
convenient, providing quick access to money used for a full range of planned (and unplanned)
spending – from medical emergencies to indulgence in frivolity – and lots of things in between.
They’re here to stay, and their popularity among students will, no doubt, continue to escalate.
Students should not be banned from access to credit cards, but they should be encouraged to
learn how to use them wisely. They need to make the connection between spending and earning,
which is a difficult connection for students who do not have steady income from employment.
Students need to be taught to budget expenses based on income. They need to understand the
financial ramifications of using a credit card, including interest accrual, capitalization and
penalty fees -- and the encumbrance on future income -- so they can make better decisions based
on the true costs of using a credit card. They particularly need to understand that there are other,
less-costly financing options for purchasing a big-ticket item, especially for costs associated with
college attendance.
The fact that average credit card debt has in fact declined in the past year is reason to be
optimistic. In recent years, the education community has begun to offer financial literacy
programs, and has become more aware of the impact of excessive credit card debt among
students. The best way to reach students is through on-campus or college-supported programs.
Whether such programs are developed by universities, sponsored by credit card companies or
student loan lenders, hosted by independent financial management experts, or by a combination
of efforts, they need to reach students. Online programs, in-person sessions, one-on-one tutorials
or group classes can all be effective for different audiences. Getting students involved in the
planning can help ensure success. The key to financial health for students during school and
after graduation is their understanding of the costs and responsibilities associated with
borrowing, particularly the borrowing that takes place every time they use their credit cards.