Are Student Credit Cards Good or Bad?

As a student, I remember being bombarded with solicitations for student credit cards when I walked through the quad. In the spring and fall, there were big booths set up outside giving away shirts, mugs, music and cash. The banks were trying to lure new applicants for student credit cards and it worked. It was an effortless sell and it appeared that anyone would be approved. Everyone I knew who applied for a credit card on campus had one in their hands within a week or two. I can think of just as many students whose balances grew and grew, because they only paid the minimum required payments. The allure was understandable. It was like free money during a time when most of us had little. With credit cards we could be wild and free. The things we could buy. The amount of debt we could ring up.
There has been a lot of discussion within campus administrations and the government recently about marketing strategies regarding student credit cards. They have begun to realize that a lot of students are taking on the responsibility of a credit card before they have the knowledge and income to support it. Students are an easy target, after all. Most are strapped for cash and are experiencing more freedom and independence than ever before. Give them a credit card and they may not know what they are getting themselves into. A U.S. PIRG study released last March surveyed college students and their credit card habits. Freshmen who were responsible for paying their own bills on student credit cards had an outstanding balance of around $1300; seniors, an average of over $2500. A late fee had been incurred by about 25 percent of those surveyed. 5 percent of the students surveyed had been so behind on payments on a card that it was canceled.
Banks who offer student credit cards claim they are doing so responsibly. Student credit cards provide a chance for students to build a foundation for their credit history. Banks say the results of the U.S. PIRG survey paint an exaggerated picture of the spending habits on student credit cards. Other studies indicate that a mere 30 percent of students actually have credit cards and the average balance carried is less than $500. Many credit card companies are now offering free seminars to help students learn to budget and manage their finances responsibly. They believe there is a role for student credit cards in the financial development of students.
University administrators do not want to ban student credit cards from campuses. They just want to protect their students from any exploitive marketing practices. Student credit cards can be a great financial tool for students, if they are used responsibly and with full respect to what can happen if the bills are not paid.