The average credit card debt per household in the United States is $15,788. The U.S. has a revolving debt of $852.6 billion as of March 2010, about 90 percent of which is composed of credit card debt. The average age a person obtains a credit card is 20.8 years.
With staggering numbers like these, it is no wonder one of the primary reasons for the Great Recession was Americans living out of their means — and it should not come as a surprise that if American’s don’t get their spending under control, then the American economy will continue to struggle.
The new initiative launched by the Texas Attorney General Greg Abbott to help students learn financial responsibility is addressing this grave problem by educating the younger generation: college students.
As a general rule, college students are ignorant about money and how money decisions will affect their life in the future, as is evident in how card debt continues to grow among college students.
Abbott’s new CD, “Money Crunch,” is designed to educate students about financial matters and will give them tips on how to handle financial freedom.
These money tips could not come too soon for a generation that grew during a spending frenzy and is now facing recession, job loss and economic hardships. Students need to take advantage of this opportunity to learn more about finances, especially since the lifestyle of living outside of one’s means, the atmosphere in which they learned about finances, turned out to be an epic failure for the United States’ economy.
Students now need to take the time to relearn financial tips and learn financial responsibility, some of them for the first time.
Baylor and President Ken Starr are also doing what they can to stave off credit card debt for college students, in launching “Money Crunch” with Abbott as well as forbidding credit card companies to solicit on campus for the past 10 years. College students, without a thorough understanding about credit cards, finance fees, interest rates or loans, are susceptible to falling prey to the credit card companies’ enticing campaigns.
Most of these “deals,” however, tend to be exaggerated or a scam. The average APR on a new credit card for example is 14.48 percent, according to creditcards.com, a market place for consumers to compare credit cards.
The stigma of credit cards does not negate the fact that it is imperative for college students to establish credit.
This editorial is not meant to treat credit cards as the plague, but they should be handled with care and responsibility.
In addition, learning about financial responsibility is not limited to just credit cards.
Students would do well to not just learn about credit card debt, but also the importance of being frugal and taking out few student loans.
According to MSN Money, most students take out an average of $21,000 in student loans, which can take upwards of 10 years to repay.
Some students manage to amass as much $40,000-$50,000 in student loans. Loans of that magnitude can easily take a lifetime to repay.