Credit Cards Ensnare Naive College Freshmen

Eager young college students are ripe targets for the hordes of credit card marketers that blanket campuses every year. But they’re adults, right? They can make rational personal financial decisions themselves and in the absence of any education about how the credit system works, right? Survey results tell a different story:

  • 56% of all undergraduates report obtaining their first credit card when they were 18
  • 83% of all undergraduates in 2001 had at least one credit card.
  • The average student has four credit cards.
  • College students’ balances have gone up 134% in the last decade.
  • Three out of five students with credit cards maxed them out during their freshman year.
  • 71% of young adult cardholders do not pay their balance off in full each month.
  • The average undergraduate credit card balance is $2,169.
  • College seniors graduate with an average of $4,000 in credit card debt.

If you can teach your kids to beware “stranger danger,” you can tell them about the APR bogeyman finance fee fiend.


Edit Your Comment

  1. UpsetPanda says:

    I’m guessing that the three out of five students who maxed them out during their freshman year did not tell mom and dad they had a credit card…and therefore, had to break it to their parents when they found themselves without the means to pay for things. Or, they didn’t think about how they would need to pay and didn’t factor in that if their parents didn’t know they had a card, they’d certainly know after they paid their bill online. I know that if my parents didn’t give me a card, they would be so angry if they found out I had gotten one. What are these kids thinking? Or are they just not?

  2. serreca says:

    @CaffeinatedSquint: They’re thinking it’ll be easy to pay off. I know that’s what I thought when I accumulated a lot of debt early in college. I’ll admit it, I was stupid, and I realize the error of my ways now. Yes, these 18-year-olds are technically adults, but the way they’re targeted is extremely predatory.

  3. HeyThereKiller says:

    ::sigh:: I guess I’m pretty average after all :(

  4. ARP says:

    I’d be interested the ratio of credit card numbers, debt, etc. v. how they are paying for school (scholarship, mom and dad, loans, etc.)

    I’ll bet that the ones that have mom and dad footing the bill make up a larger than average percentage of the heavily indebted described here. Why? the people who have loans (presumably) have some concept of debt and that they will already owe money when they get out.

    That said, when I got school loans, the numbers were completely meaningless to me until I graduated and had to make payments.

  5. johnva says:

    @serreca: They’re adults, legally. They can enter into a contract, which is what a credit card is. I don’t see how it’s any more predatory for credit cards to market to 18 year olds than to anyone else. There are stupid people and people who aren’t financially educated of all ages. I’ll agree that there is some deceptive marketing out there, but I don’t see why it’s the credit card company’s responsibility to protect legal adults from themselves.

  6. Jeff_McAwesome says:

    Oh dear god. How does one manage to get a $2100 balance!? As of now I have a balance of $83.18 and that is all from this month. I am going to take a survey of my friends and see if they are as dumb as the average college student.

  7. adambadam says:

    @ARP: Yes, though it is not clear if the balance is carries over month to month. If mom and dad are footing it I imagine it is being paid off since mom and dad, at least, have some money sense.

    Unfortunately money management is not what we are taught in schools, and it is people like this who keep my credit limit arbitrarily low.

  8. HRHKingFriday says:

    To be fair though, a lot of private student loans serve the same function and can be just as damaging for post-grads. My (private, east coast) school used to ask me how much I “wanted in loans” each semesterd. And, not gonna lie, sometimes I took a lot more than I needed to have a little extra “fun money”.

  9. char says:

    Those numbers are flat out scary. I never saw the CC people at my school, but it was only 2500 students. That’s just insane though, if you aren’t footing the bill, college is one of those times when you can live cheaply. Food is payed for, lots of free entertainment oppurtunities, lots of ways to get free booze. Freshmen year I did fine on about 150 a month, and about $400 in spending cash I would get from various odd jobs at breaks (over a 10 week term). I basically spent all my time playing ultimate, studying and doing campus events.

    Then again, 2 of my best friends were around 4000 in the hole by junior year, a bunch of that was from using CC for food and beer and spending all their cash on pot. I didn’t really count the drugs factor there.

  10. Jeff_McAwesome says:


    Where is this free booze you speak of?

  11. protest says:

    i’m willing to guess that all these poor, victemized college students with huge credit card debt did not work during college. That’s the trade off, you want time to f*ck around and get drunk every night? Then get the credit card. You want to graduate with a little change in your pocket, you work, and party less often. i just graduated and i don’t feel bad for any of those people.

  12. UpsetPanda says:

    @ARP: I know most of the friends I had who had loans, had parents paying the loans…going to college is more of a financial burden on parents, I think. The parents have to take out the loan, have to buy the dorm stuff. I was lucky to not need a loan but I also never went into debt either.

  13. protest says:


    frat parties, house parties, 25 cent beer night at the bar.

  14. char says:

    @Jeff_McAwesome: Fraternity rush (even if you have no desire to pledge).

    I’ve been told the school I went to was a little different, in that most fraternity parties were open, and the booze was free. Even still knowing the right people isn’t impossible, and often you can mooch off those guys buying kegs on said credit cards ;).

    By senior year, there starts to be department parties with free booze to. Engineers BBQ was always a good time.

    A friend of mine pitched a social network using SMS to find free booze for his senior project, it was denied sadly.

  15. smitty1123 says:

    Boo hoo. I feel about as sorry for them as I feel for the pedophile who gets beaten to death in prison during the riot.

  16. Boberto says:

    @smitty1123: Nice. Parallel between Credit misuse and pedophilia.

  17. anatak says:

    @johnva: Like usual, its not what they do, its the way they do it. Yes, it is predatory. And no, its not the job of the credit card company to protect the students from themselves, its the job of the university not to sell their students out to the highest bidder and profit from their naivety.

    I won’t claim to have been ‘smarter than all those dumb college kids’. But I was fortunate enough to to realize that my money management skills were rather laking and I should maybe hold off on a credit card and see if I could handle a debit card.

  18. TWSS says:

    I can’t help but think that maybe it’s better for a 19 year old to learn his or her lesson with a credit card maximum of $2500 than wait ten years and screw themselves with a $300K ARM.

  19. johnva says:

    @anatak: I agree that the way it’s marketed could make it predatory if it’s done in a very misleading way.

    How are the universities profiting from students going into credit card debt?

  20. ogman says:

    Even worse than credit cards are these new private student loans. Is predatory lending really the only industry left in America?

  21. czarandy says:

    I’m a student and I got my first card right after I turned 18. I have never paid a cent in credit card interest. I have about 12 cards. And I get around 3% of my spending back in rewards, plus I’ve gotten around $500 in total signup bonuses. Hooray.

  22. @czarandy: Good for you!

    My younger brother will be turning 18 this coming year and heading into college, and I will be instructing him on the benefits of an early App-o-Rama to help build his credit score for the future when he gets out of college and needs things like, oh a car or a house.

    Having many credit cards is not a problem. Having a balance on those cards is the issue.

  23. howie_in_az says:

    Clearly the solution is to ban college freshmen.

  24. PSTOKELY says:

    Even if they are banned from the campus, they may often appear at a place just off campus offering a free shirt or something? Is there a connection between GPA and debt?

  25. JiminyChristmas says:

    @ogman: No kidding. I was floored to learn a couple of years ago how many students are taking out private loans with rates in the 12%-15% range.

    It makes my college experience seem pretty quaint. All of my loans were either GSL’s or Direct Loans. The highest interest rate I ever had was 6% fixed.

    I wouldn’t harsh on the college students too much. It wouldn’t surprise me to find that many of them are using CCs to cover their academic expenses. Hell, if your student loan rate is 15% a credit card could be a bargain by comparison.

  26. BigNutty says:

    My son received a credit card with no job like many 18 year olds do because they figure the parents will pay for it.

    If the kid is smart, or if the parents are smart, they will have already taught them about the credit card business and how to slowly build up a good credit record.

  27. devinburn says:

    its kinda sad, but all these bad stats help the kids who do pay their bills. the credit card companies give a way a lot of free stuff if you sign up ’cause they know statistically they’ll get it all back and then some. you just gotta be careful.

    also, the maxed out stat is probably a little skewed -a lot of college students’ parents (if they’re smart) will make the max really low, just in case.

    its good to start building a credit line in college, its bad to start accumulating debt

  28. FLConsumer says:

    @Jeff_McAwesome: $2100 would be a “light” month for me, but I’m also a very non-traditional college student who works 40-80 hrs a week at a well-paying fulltime job as well. Some of my coworkers spend upwards of $10-35k/month on their credit cards, *BUT* they are paying them off each month. BIG difference there.

    I blame the parents. Pure & simple. I’ve never carried a balance, never will. I know what it’s like to be down & out (sleeping in car) to living the jet set lifestyle (now). Then again, mommy & daddy of today still haven’t grown up themselves and expect mama gov’t to wipe their noses for them and bubble-wrap them from harm. Really, is it any surprise that college students, who are renouned for their lack of self-control in many areas of their personal lives, also lack self control with their finances?

  29. FLConsumer says:

    @howie_in_az: I like the idea, but then what do we do with all the useless people who weren’t smart/industrious enough to make money while in high school/just out of school? Maybe we can bring back the WPA. There’s certainly enough bridges & roads out there which need rebuilding.

  30. dh86sj says:

    See, I’m a college senior, so I’m really getting a kick out of this. I’ve got two credit cards, one for my bank at home and one for my bank at school. So statistically, theres gotta be some douche out there with 6 credit cards.

    My parents instilled in me that the quickest ways to compromise my future were to have a child out of wedlock or to rack up credit card debt. seriously. I don’t get these kids that think they can spend spend spend and pay it all off later.

    The problem is that when you enter an American college, your intro to the university class is all about the dangers of abusing alcohol and liberal indoctrination. Nothing about personal finance. Hell, at least when my liver gives out, I’ll be able to pay for it.

  31. mac-phisto says:

    @johnva: you’re right, it’s not credit card companies’ responsibility to protect consumers. however, consider this: most college students don’t have jobs & many have zero credit history (or at least zero payment history – student loan payments don’t begin until after school). how do cc companies justify giving an unemployed student a $5000 card? conversely, why don’t they give the same offers to those that are not in college?

    getting a card at 18 is hard…unless you’re in college. i had four before i graduated. i didn’t have a job when i got the first two. by the time i got the third, i had a p/t job making about $100/week. by the time i was a senior, i already had some serious debt issues & two jobs. $10,000 in available credit lines & i grossed less than $20,000/year.

    i feel like i was sold out. all the cards i received were heavily marketed to me: booths throughout campus, fliers in the textbooks i bought for school! credit apps in my dorm packet, on student bulletin boards, left on desks by the credit elves before class, slid under my dorm room door.

    how do schools profit from this relationship? primarily, it is used as a fundraiser for student groups (paid fees for completed apps). but the rabbit hole gets deeper: i went to penn state & when i attended, the school had a bylaw that forbade the naming of any university building after a corporation. by the time i graduated, mbna (the holder of my first card) had donated millions to the university & built the “mbna career center”.

    i don’t blame anyone else for the debt i built up – that was mine. but i wasn’t a financial genius at 18 – NO ONE IS. i blame the university for failing in their fiduciary duty to protect their students from financial predators. & i blame credit card companies for deceptive practices.

    sorry so long…i’m pretty passionate about this.

  32. Anitra says:

    Why don’t parents teach their kids this stuff BEFORE they leave home?

    I knew exactly how credit cards worked when I got one at age 18 (ie. they aren’t free money). I NEVER carried a balance on it, I always paid it off in full every month. How did I manage that? As SNL would say “Don’t buy stuff you cannot afford!”

    Not saying that I was a financial genius, but basic finances should be this easy.

  33. Raziya says:

    Hooray, I was never part of this stat…23 and I have no credit cards at all. :) I’m sure someone has an extra 4 credit cards for me!

  34. Sam2k says:

    I am a 19 year old college student. At any one time, I have 3-5 credit cards on my parents accounts (my dad plays the cashback game to about $1500 a year) and my own Visa and Amex. My parents taught me long ago that you do not purchase things you cannot afford and that credit cards are paid off in full every month. I carry no credit card debt on my personal cards and neither do my parents.

    Also, I’ve yet to see a credit card salesman on my college campus. I’ve seen a couple flyers about referring friends, but thats it.

  35. Spotpuff says:

    I am always highly confused by all these credit card articles that demonize credit card companies without considering that maybe people just shouldn’t buy stuff they can’t afford. Actions have consequences; just because you’re too stupid to understand what they are doesn’t make it someone else’s fault.

    I got my first credit card at 17 (in Canada); it was a student card with a $500 limit. Never had any debt problems. Co-op paid for school (though our university is cheaper here) and I never had any debt.

  36. BStu says:

    I was a poor college student who had the decency to know he was poor. I never got anything I couldn’t afford. I didn’t go on lavish Spring Break trips. I never even got a credit card. Heck, I didn’t even have an ATM card. I spent my college years with a freakin’ passbook account. My first credit card was a college alumni branded one. In the first couple of years, I ran up about $1,000 balance, but I took out a loan and paid it off as well as some other personal debts and moving costs and have paid it off every month since. The loan is now long since paid and I’m carrying no credit card debt. I have student loan debt, sure, but I kept myself from getting buried by credit card debt.

  37. HRHKingFriday says:

    @mac-phisto: Thats because they know that students will ask their parents for help after they run up a tab they can’t afford. I had way too many friends in college that got cards, and *oops* at the end of the semester couldn’t pay them. Sometimes they’d work out a way to pay their parents back through summer jobs, but lets face it. Our generation (gen y) and our helicopter parents are easy targets.

  38. deprefuse says:

    I’m a 19-year-old college Junior with two solid jobs, one paying 7.50/hr (20 hrs/week during school, 35 during summer), the other paying 9.50/hr (10 hrs/week during school, 35 during summer). I’m a huge tech geek and spend a lot of money. You’d think I’m the perfect target for credit card marketing.

    I can’t get a credit card to save my life.

    My name is tied to my mom’s credit cards. One closed account is listed as a negative item on my credit report because it had been past due. Another one that is open has about $15,000 on it. I’ve asked her numerous times to try to break ties with me on her cards, but she won’t follow through.

    Is there anything I can do? I really want to start building my credit and have a credit card in emergency situations. I had to foot a huge vet bill last month and it stretched me to the brink because I have no means of charging something and paying it off in two weeks. Consumerist.. what can I do?