The average American is starting to dip their toe into
credit again by opening a new credit card or charging more purchases, but young
people are noticeably absent when it comes to establishing credit.
In a survey of undergraduates ages 18 to 24 in 2012, only thirty-nine percent had a credit card, a significant drop from 49 percent in 2010. The median credit card balance has also dropped over the years down to $1700 in 2010. Part of the reason why fewer undergrads are applying for credit cards is the new regulations for lenders promoting credit cards on college campuses. Credit card companies used to offer free t-shirts, coffee mugs, or pizza in exchange for college students applying for a credit card, but new regulations prohibit this kind of promotion.
On the one hand, it is undoubtedly a good thing that credit card companies cannot target college students in this manner anymore. No one wants students graduating from college with staggering credit card debt on top of their student loans. On the other hand, it isn’t good that they aren’t establishing any credit at all. Young people should get a credit card, use it sparingly, pay it on time, and keep it open. It isn’t good to graduate with a pile of debt, but it also isn’t good to graduate with only student loans on a credit report. Hopefully a thorough credit education among young people can help them make better decisions and establish a strong credit report.
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