Survey: Students avoid credit cards

Credit card debt has impacted the U.S. in a big way and college students have not been immune to its destruction.

A study by Sallie Mae, a company that provides student loans, found that the average undergraduate carried $3,173 in credit card debt last year, the highest level since Sallie Mae began collecting this data in 1998.

In 2004, the last time the study was done, students carried an average of $2,169 in card debt.

In 2008, college seniors with at least one credit card graduated with an average of $4,138 in card debt, up 44 percent from 2004.

By comparison, freshmen's average credit card debt jumped 27 percent to $2,038.

ASU economics professor and author of the book, "Inequality, Consumer Credit, and the Saving Puzzle," Christopher Brown, believes one of the many reasons so many students are in debt is because of all the new expenses students have.

"I didn't know anyone who had a credit card," Brown said comparing credit cards to when he was in college. "It was ridiculous to have one."

Brown believes that with the high cost of tuition, plus all the new things people can get these days, students have come to rely on credit cards.

"Young people can be a very easy target," Brown said. "(They) need a lot more stuff to avoid social oblivion."

Credit card debt is one of many factors to the country's economical oblivion.

In response, as they've done with the auto industry and hope to do with the health care industry, the White House has stepped in to ease the pain of those in debt and credit card companies.

The Credit Card Accountability, Responsibility, and Disclosure (CARD) Act of 2009 passed this spring by a 90-5 vote.

According to the White House Web site, CARD will be a help to college students.

"The act contains new protections for college students and young adults, including a requirement that card issuers and universities disclose agreements with respect to the marketing or distribution of credit cards to students," the site said.

With the new regulations, credit card companies must notify customers 45 days in advance of any change to their interest rate, send a credit card statement at least 21 days before payment is due, and college students under 21 must have a co-signer.

The Herald conducted an unscientific survey to see ASU students' credit card usage.

Hundred twenty-one students, 1 percent of the student body, were selected at random to participant in the survey.

Results showed that 66 students don't have credit cards, while 56 students have at least one to two credit cards.

Sixty-three students without credit cards are traditional students, meaning they are under the age of 25. Of those 63, 15 are between the ages of 21 and 25 and 48 are between the ages of 17 and 20.

The survey shows that 55 students with one to two credit cards are traditional students. Twenty-two of those students are between the ages of 21 and 25 and 33 are between the ages of 17and 20.

According to the survey, of the 56 students with one to two credit cards, 17 always pay more than the minimum balance on their payments. Fourteen students said they mostly pay more than the minimum balances and 15 students never pay more than their minimum balance.

Students use credit cards for a variety of reasons, but the Sallie Mae research showed that more students are paying for educational expenses, such as books and school supplies with credit cards.

According to Sallie Mae, in 2008, students charged an average of $2,200 in educational expenses to cards, up 134 percent from four years earlier.

The ASU student survey showed that 54 student who have one to two credit cards, never use them to make payments for other credit card balances.

Surveyed ASU students also said they don't use their cards for large purchases or bills, either.

Thirty-four students said they never use their cards on large purchases such as cars, furniture or things over $600 and 38 students said they never pay bills, such as utilities, car notes or school tuition, with their credit cards. Twenty-two students said they sometimes use their cards for everyday purchases, such as groceries, gas and shopping.

Many of the regulations have already gone into affect and card companies are making revisions.

Since the regulations were approved, card companies have been closing inactive accounts, cutting credit limits and raising interest rates.

"People are going to make money if they can," Brown said. "(It) depends on the people forcing the politicians to do something."