Why Do College Students Fall Into Credit Card Debt?

Schooling
Only about 26 percent of teens understand that credit card companies (Credit Card Education) make money through charging interest and charging late fees, based on Charles Schwab. In a this year Sallie Mae survey, 84 percent of school students felt they needed formal financial schooling classes--with 64 percent wishing they had received this kind of education in senior high school.

Considerations
Educational costs probably contributes to student personal credit card debt. The average personal credit card debt load for students has climbed combined with the cost of college, based on USA Today. Also, private academic loans are becoming harder to get--part from the reason for a 134 percent embrace educational expense related credit card debt within 2008. According to Sallie Mae, a minimum of 30 percent of students have to infuse of their tuition on credit score.

Function
Bank cards can lull students into going over spending budget, according to CNN. Gaining a credit line lets students believe that have cash to spend on items, such as clothing and electronics, that they you don't have. Additionally , college students happen to be strained financially due to the costs of school, so putting something on credit simply seems like the only choice.

Potential
This year, a new credit card law--the Charge card Accountability Responsibility and Disclosure Take action (CARD Act)--put an end to credit card issuers enticing students to apply for credit cards by giving away free pizzas as well as T-shirts, according to Smart Money. Still this just means credit card companies (Credit Card Education) may start giving away promotional items to build brand name loyalty or to get their parents in order to co-sign on a card.

Suggestion
Despite the new law, credit card issuers, such as Discover, intend to continue marketing toward college-age individuals. Even though signing up for a credit card early assists establish a longer credit history, you most likely should avoid a credit card unless you have better financial management skills, based on College Board. Alternatively, you just could use a debit card to assist prevent going over budget, or maintain a credit card in case of an urgent situation.