College Kids and Credit Cards: A Deadly Duo

Less than ten percent of college kids carried credit cards in the 1990's. Approximately 70 percent carry these little gems today. Those that have credit cards don't just carry one card; five is the average.

The most striking aspect of this decline into indebtedness is that many of these young people are using their long-term college loan money to pay off short-term plastic debt.  Many young adults are coming out of college with so much debt they will likely be in debt for the rest of their lives! Unless they make a u-turn in a New York minute, many will never be able to save for their own kids' college educations, give to others, or prepare properly for their own retirements.

Frankly, I get angry at colleges (even Christian colleges) that let the credit card companies set up their little card tables on campus loaded with $3.00 gifts: tee-shirts, Frisbees, and coffee mugs.  All they have to do to get one of these fabulous gifts? Sell their soul and accept a credit card.  In many cases, under present law they don't even have to show a source of income.

With all that said, I am not suggesting that it's always a mistake for a college student to carry a credit card. I am saying it's time for parents to get involved, and stop letting the inmates run the asylum! If you want to let your Joe Cool go to college with a credit card, fine.  But consider doing five things first:

1. Set a low spending limit. In most situations, a card with a $500 or $1000 limit is more than adequate.

2. Decide what the card can (and, cannot) be used to purchase.  Is it just for emergencies? Can she buy gas with the card? What about cloths or books?  Make a list (hopefully a short one) and have both parties sign off on it. 

3. Determine to pay every penny every month -- no exceptions. This is the time when life-long habits are being formed. A "zero tolerance" plan makes great sense here. A credit card is not a magic carpet ride. It is simply an instrument for paying bills and keeping records. Using a credit card to buy stuff we don't have the cash to pay for is the beginning of a train wreck.  

A little further education here: It would be wise to help your son or daughter understand that one of the reasons merchants like credit cards is because they know plastic spending is less painful to the spender than using real money. People using credit cards will spend on average 12 to 18 percent more than they would if they were using cash. The goal is to avoid the urge to splurge.

4. Every month, within 24 hours of the time the student receives his credit card bill, he promises to fax you a copy to review.

5. If any of the provisions in 2, 3, or 4 above are broken — the card is closed and canceled. No exceptions.

Tough love? Maybe. But there are millions of young American adults today who now wish someone loved them enough to apply these five simple rules a few short years ago.

March 1, 2010

Steve Diggs presents the No Debt, No Sweat! Christian Money Management Seminar at churches and other venues nationwide. Visit Steve on the Web at www.stevediggs.com or call 615-834-3063. The author of several books, today Steve serves as a minister for the Antioch Church of Christ in Nashville. For 25 years he was President of the Franklin Group, Inc. Steve and Bonnie have four children whom they have home schooled. The family lives in Brentwood, Tennessee.

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