Credit cards can be an extremely attractive option to college students because of the added illusion of freedom that they provide.
Students can spend without immediately feeling the repercussions of these expenses.
A recent study done by Nellie Mae (an extension of Sallie Mae) that analyses credit card use of loan applicants found that about 40% of undergraduates knowingly spend more than they can afford by spending on credit.
This irresponsible use of credit can lead to carry high balances and high debt upon graduation.
In fact, Nellie Mae found that an increasing number of students are placing education expenses on their cards, including tuition.
If this balance can not be paid within the month, students are effectively paying more than is necessary for their college education.
Perhaps even worse, college students will graduate with an inordinate amount of debt at a crucial transition period during which credit reports and financial stability become increasingly important.
The study conducted by Nellie Mae reported that the average undergraduate owns 4.
6 credit cards and at least 50% percent of students have 4 cards.
This high level of credit use makes bankruptcy filings a reality within four years of being eligible to have a line of credit.
This study found that credit card use increased as students progressed through there education, with an average unsecured debt of $4100 for a graduating senior.
This trend is only prone to increase as students are increasingly inclined to take five years to get their undergraduate degrees.
College students need to be aware of the realities of bankruptcy and the effects of credit-related debt.