College loan debt may be sky high but the image of college students running up huge credit card balances may be unfair. A new survey suggests that, when it comes to handling credit card debt, college students may be doing a better job than their parents.
In its survey, CreditDonkey asked college students if they felt "responsible" enough to use a credit card. Not surprisingly, 85 percent said they did. Only 15 percent confessed to being unable to handle plastic.
Thirty percent of college students said they got their first credit card at age 18, the age when most students go off to college. The recently-passed CARD Act has provisions to restrict credit card marketing to college students who, it was feared, would run up mountains of unaffordable debt.
Nearly a third have no card
The CreditDonkey survey suggests that isn't a problem, or at least it isn't anymore. In fact, 30 percent of college students polled said they did not have a single credit card.
A major problem with credit cards is that consumers often run up their balances, intending to pay them down in the future, but find they are never able to do so. As a result, they suddenly find themselves with balances of several thousand dollars and, at credit cards' high interest rates, it is all they can do to keep up with the interest payments.
The survey suggests college students have yet to fall into that trap. When asked how much they pay on their credit card bill each month, a surprising 42 percent said they paid off the balance each month. Only 17 percent confessed to paying just the minimum each month.
Prefer debit cards
Sixty percent of college students questioned in the survey said they use their debit card rather than a debit card for everyday expenses, another sound financial habit. The biggest use of credit cards, according to the survey, was to pay for text books, which can run hundreds of dollars a semester.
Many of the students expressed concern about college loan debt and were mindful of ways to minimize it. Seventy-eight percent were aware that college loan debt cannot be discharged in bankruptcy.
"College students' confidence in their ability to manage debt may be well-founded, especially when compared to the baby boomers, who, in recent years, have become synonymous with high debt," said Charles Tran, founder of CreditDonkey.com.
Recently, a majority of boomers between 50 and 64 surveyed by the AARP said that they feel anxious about whether they can afford to retire, thanks both to high levels of debt and low levels of assets.
How they voted
Yes
Yes