I stumbled across this Consumerist article listing some statistics on young adults and credit card debt, and it brought me back to those days in college where I'd sign up for a credit card just to get a free t-shirt (just like the one below) or chat with the cute frat guys.
...But thank God I never gave them my real information. I'm not sure where exactly these numbers came from, but they sure are pretty grim!
- 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.
Three out of five students max their cards out during freshman year? Some of these kids don't even know how to make scrambled eggs, but they're given "free money" to piss away on booze and burritos.
I didn't get my first real credit card (not check card) until right after college, and I'm probably a credit card company's worst nightmare: a young adult who doesn't buy anything she couldn't buy with cash, and pays each balance in full, on time, every month. Boy am I glad my parents installed the fear of debt in me at a young age.
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2 comments:
I was actually "awarded" my first credit card while I was still in high school. It had a $500 limit and I never used it...ever. I closed it after a couple of years.
My next credit card came just after my Senior year of High School and I used it occasionally, but like you I kept a low balance and paid it off each month. The credit card company kept upping my limit and lowering my interest rate to try and get me to carry a balance. After a few years, it worked a little bit, but I was usually below a couple of hundred dollars.
For years that was the only card I had. When I got married, some extra debt went on it and it had a balance just under $2000 but we paid it off fairly quickly.
Between my wife and I, we had 2 credit cards that got used and another 2 that just sat there in case of emergency.
Nearly a dozen years later, we have 1 credit card that's used and another card that's chopped up but we have the account number if we MUST use it. However, we've gotten worse and we actually do carry a fairly significant balance (though honestly nowhere near our limit...I could buy a car on my card with the limit they gave us). We pay large payments to the card each month, but we also have a lot of frivolous fun.
Reading your various stats I'm not terribly surprised. Society has changed from skeptical and frugal to disposable and carefree. It's insane and very sad.
And I'm sad to say, I've slipped down the path to some degree.
Carrying debt isn't so bad, as long as it's being done with a purpose (e.g. buying a house so that you have a roof over your head, or 4 years of college that lands you a better job). But where people usually get in trouble is using debt for frivolous things. "I just need that $600 phone" or "I look great in those $150 jeans" are two of the most popular phrases that most likely lead to the statistics you quote.
The 71% of young adult college students carrying a balance is ridiculous. College students typically have credit cards that carry higher interest rates (sometimes 20% or more!), meaning that they are paying even more than you or I would. This is basically like taking money and burning it. Think of all the stuff you could potentially buy (or the money you could save) if $40 to $100 a month didn't go to the credit card company, paying only the finance charges.
At the same time, perhaps the credit card companies should be held more accountable, as they are pushing this purchasing power onto young adults who, as you so eloquently put it, "don't even know how to make scrambled eggs." Maybe there should be a minimum age requirement, or a minimum income/savings requirement.
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