The recent financial downturn caused many consumers to re-evaluate how they use the credit that’s available to them, and this seems to be true even of people who were not yet old enough to open their own accounts when the recession ended a few years ago.
Today, just 35 percent of college students have credit cards in their name, down from 42 percent just two years ago, according to a new survey from Sallie Mae and Ipsos. However, part of that seems to be related to the new age restrictions set by the federal government, as just 18 percent of freshmen have accounts, compared with 60 percent of seniors.
However, it seems that regardless of age, many are being far more cautious about their balances, as less than one quarter had balances of more than $500, while one third kept none at all, the report said. Another 42 percent had balances of $500 or less. Moreover, just 23 percent said they’ve received some financial assistance from their parents when it comes to paying these bills.
Students are also more confident in their ability to deal with these accounts, the report said. In all, 60 percent say they’re either good or excellent at managing their finances. The company further cautioned students to be mindful of their spending when they do have credit cards, as charging more to those accounts than they can afford to pay back in a given month can create a vicious cycle of debt from which it is extremely difficult to emerge without a steady stream of income — something many college students may not have.
[Related Article: The First Thing to Do Before Applying for a Credit Card]
Consumers in general are only just recently renewing borrowing efforts in earnest, as balances have been on the rise recently. However, many may also be more cautious than they were in dealing with those balances prior to the recession. Instances of delinquency and default on these accounts remain far lower than historical norms, indicating borrowers are certainly striving to make their payments on time and in full, even as they take on more debt in general. However, numerous studies have shown that college students leaving school with large amounts of credit card debt — totaling thousands of dollars — could be at a significant disadvantage when it comes to achieving financial independence.
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