How Students Use Credit Cards

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Sallie MaeEach year, Sallie Mae does a national study on how undergraduate college students use credit cards and their usage trends. 2009’s report was released this week with a bang because they discovered that credit card usage has increased to levels never seen before.

Here are some staggering statistics:

  • Students have an average of 4.6 credit cards!
  • 84% of students have at least one credit card.
  • The average (mean) balance is $3,173, the highest ever recorded in the study’s history.
  • The median balance was $1,645 with 21% of students having between $3,000 and $7,000 in debt.
  • 39% of students already have a credit card before they arrive on campus.
  • Median debt of those students was $939, up from $373 in 2004, with only 15% having a $0 balance.
  • Students graduate with an average of $4,100 in credit card debt with almost 20% having more than $7,000 owed on credit cards.
  • A third of students rarely or never discussed credit card use with parents.

The report goes into much greater detail but two things jump out at me:

  1. A lot of students are getting credit cards before they even show up for college. The study went on to talk about how students respond to marketing. 38% respond to mailings and 19% are referred from a parent. In both cases, the parent can be a gatekeeper to help education their student on how to make smart financial decisions. Remember, you can’t get a credit card until you turn 18.
  2. A third of students rarely or never discuss credit card use with parents. That was the most telling statistic in this entire survey, to be honest. It’s great that 65% did discuss it with their parents but that other 35% can see some immediate gains as long as they talk about how to use credit cards better. It’s not a panacea but if you’re a parent and you aren’t talking about credit cards with your child, you should be.

I think that credit card education is a lot like sex education, minus some of the sensitivity. You can expose and educate students on the topic so they can be knowledgeable and make the right decisions. Or you can shield and protect them yourself until they’re ready for it. In both cases, students are getting exposed to the topic at younger and younger ages.

If you’re a student and reading personal finance blogs, I commend you. I recommend checking out my post on smart student credit card use and my 40 money tips for college students for some suggestions on how to be smarter with credit cards.

How Undergraduate STudents Use Credit Cards (, 1MB PDF)

{ 10 comments, please add your thoughts now! }

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10 Responses to “How Students Use Credit Cards”

  1. This is a great article! I probably will use it in my next “Top Ten Posts” contest.


  2. Wow, those statistics are staggering. I’m really surprised at the number of student whom have a credit card even before college! I would have never guessed it to be that high, which I guess is not a good thing.

  3. Rob says:

    It would be interesting to see the credit card habits of the parents of the 1/3 that rarely or never discussed credit card use with parents. I’m not saying discussion would necessarily be a bad thing. But given that most Americans are in a heap of debt, there’s a good chance that these students picked up some of their financial habits from their parents, whether discussed or not.

  4. Henry says:

    “A third of students rarely or never discuss credit card use with parents.”

    The problem is that at least some of those parents are just as bad with their own financial management.

  5. Matt Fyffe says:

    It’s interesting to see the relationship between students and credit cards. It took me a really long time to finally get a card myself, it just was never something that seemed necessary.

    I’m surprised at how much credit card debt most students leave with though. Considering these students also have tons of loans, they’re facing a lot of debt.

  6. Steven says:

    Out of all my friends, I am the only one who took student loans. I got out of college with 14k in loans at an average interest rate of 6% that I did not have to pay interest on until 6 months after graduation.

    I’ve got friends in their 2nd year with 2k on the credit card, and growing, paying ~30% interest.

    They say they don’t believe in taking out loans for their education. Am I missing something here? Isn’t that credit card essentially the same thing, but you’re paying more?

  7. No surprises here. With less work availble for students and parents strapped for cash as a result of the downturn in the economy, it’s natural to see an expansion in students’ debt load. While it is sad to see these numbers and the future financial horror that will visit a good number of these students sooner than later, the bottom line is that we’re doing a piss poor job of educating our young people. Some items I don’t see include:

    1. Percentage that pay late and/or over the limit fees on their cards
    2. Percentage that will receive collections calls
    3. Amount of money colleges/universities get paid to allow companies to sell debt on campus


    If you think about it, the first independent financial decision most people make is not to open an investment account, but rather, is to open a debt account in the form of a credit card. The ones I have the greatest concern for are those with parents who are telling them they must have a credit card.

    It used to be that if you wanted to get ahead financially, you’d need to save more than your peers. Now, it would appear that to get ahead, you only need to say no to debt. Having zero net worth is better than the many who are underwater. I would go so far as to contend that credit cards and other unsecured debt serves to increase the gap between the haves and the have-nots…not the other way around as the industry continues to claim.

    Jim-thanks for putting this up there…these stats should be included in every admissions application, but whatdoiknow?

  8. Paige says:

    I got my first credit card when I was 18. The limit on it was only $300. I was not the normal teen though, I paid off my $30-$50 balance every month. I have always hated to be in debt. Almost ten years later and I am the same way.

  9. This is a really important issue. So many students graduate with enormous college loans. When they add their credit card debt to it, it will take them years and years to recover. It’s not fair to blame the credit card companies, but they inundate students with offers – it’s just too tempting. Students (and many other Americans) just don’t realize how quickly the debt can add up.

    Thanks for an enlightening post.

  10. Reagan Hopf says:

    Students are just a reflection of the whole society, that is showing a high degree of consumism, based on the leverage provided by credit, especially credit cards…

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