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A credit card is a valuable financial tool when used properly. You can build your credit score, learn about money management, earn rewards and even split up a large payment over several months if needed. Unfortunately, you can qualify for a credit card long before you understand how they work, what habits damage your credit score and how debt grows once you accumulate a balance. This especially applies to college students, who are often first-time cardholders.
Do college students take on more debt than the average cardholder? What do they most often use their credit cards for? To help you understand how this population uses credit cards, we’ve rounded up some of the most helpful statistics.
- 57 percent of college students have a credit card. (Sallie Mae)
- Just 24 percent of college students with credit cards feel they have excellent money skills. (Sallie Mae)
- College students had an average credit card balance of $1,423 in 2019, up from $1,076 in 2016. (Sallie Mae)
- 22 percent of college students want to better understand the pros and cons of borrowing money with credit products. (Sallie Mae)
- The most popular type of credit card for college students is an independent card in their own name, compared with being an authorized user on a parent’s card, having a co-signer, or having a secured credit card. (Sallie Mae)
- 57 percent of college students only use their credit cards for emergency expenses. (College Finance)
Average student credit card debt
Student credit card debt has risen in recent years. Between 2016 and 2019, the average student credit card balance increased from $1,076 to $1,423, according to data from the Sallie Mae Majoring in Money 2019 report. That’s well below the average credit card debt in the U.S., which is $5,221.
Still, students should avoid unnecessary debt. Credit cards can be an appealing solution for those who often have limited cash flow, but that lack of cash flow can make it all too easy to struggle to pay off that debt.
Student credit card ownership
Sallie Mae estimates that 57 percent of college students have a credit card, and the types of credit cards they have can vary greatly.
- 17 percent have a card with a cosigner
- 25 percent are authorized users on a parent’s card
- 28 percent have secured credit cards
- 64 percent have an independent card in their own name
Building credit during college is a great idea, and using a student credit card responsibly is an easy way to do so. While students may not qualify for most credit cards without a consistent source of income, they can consider these options for building their credit:
- Become an authorized user. If a student can’t qualify for their own credit card, they can have a trusted family member like a parent or guardian add them as an authorized user on their credit card which can help them to build up their credit score. When you’re an authorized user, you can access the primary cardholder’s credit limit using your own copy of the card.
- Open a student credit card. A student credit card is designed for college students and is tailored to their needs. Because students don’t typically have much of a credit history, other factors are taken into consideration when they apply — like their grades.
- Open a secured credit card. A secured credit card is essentially a debit card that helps you build your credit history. You load money onto the card and the amount you deposit acts as your credit limit. When you make payments, your good credit behavior is reported to the credit bureaus and you help build your credit history.
- Get a co-signer. You also may have the option to apply for a credit card with a co-signer who has a more established credit history than you. Most large credit card issuers have done away with this option, but smaller institutions like credit unions may still offer it. If you do go this route, be careful. Your co-signer is on the hook for any of your missed payments, which can hurt both of your credit scores.
Student credit card usage
We know that over half of college students have a credit card. But how are they using them? In general, college students tend to use their credit cards the most for larger purchases and online purchases, as well as groceries and entertainment. Also notable is the fact that credit card spending increased in every category from 2016 to 2019, suggesting a general increase in comfort with credit cards among college students.
|Credit card purchase category
|College students who used credit cards (2016)
|College students who used credit cards (2019)
|In-store purchases ≤$20
|In-store purchases >$20
|Online purchases ≤$20
|Online purchases >$20
|In-home entertainment services
Using a credit card for any type of purchase is a great way to earn credit card rewards like cash back, but only if you pay your balance in full and spend wisely. A 2021 study by CollegeFinance found that about 15 percent of college students have maxed out a credit card, and those that did so have maxed out their cards an average of 3.8 times.
How to avoid credit card debt in college
Building credit as early as possible is beneficial for those who one day want to buy a house or a car. At the same time, credit cards can be fraught with danger for college students who have lots of expenses and little income.
Luckily, following a few key best practices can keep you out of trouble with credit cards, letting you reap all of the benefits without any of the pitfalls. Here’s what’s most important.
Always pay your bill in full and on time
The best way to avoid credit card debt is to make a habit of paying off your credit card balance in full at the end of every cycle. It’s a myth that keeping a small balance is better for your credit score. Because of how credit card interest works, only making minimum payments is a costly mistake: When you carry a balance, that balance accrues interest, which then causes the balance to grow exponentially. According to College Finance, only making the minimum payment is the most common mistake among college-aged credit card users, made by about 48 percent of cardholders in that age group.
Additionally, paying off your credit card balance on time can help you avoid any late fees. The second most common mistake College Finance found was missing a payment, which about 38 percent of college students admitted to. Payment history is the single most important factor that goes into your credit score, so you should make every effort to avoid late payments. Most credit cards offer the option to set up automatic payments.
Make a budget, and stick to it
A 2022 study by College Ave Student Loans found that 50 percent of students keep a personal budget. Sticking to a budget can make it easier to afford credit card payments, but this can be something that college-aged credit card users struggle with: 55 percent of college students find it easier to balance their budget when they use a debit card instead of a credit card, according to Sallie Mae’s Majoring in Money report. When you have a budget, you know how much you can afford to spend and will be less likely to make purchases using your credit card that you can’t afford to pay off.
Use your card for emergencies only
When first learning how to manage a credit card, it can be helpful to only use the card when absolutely necessary. According to College Finance, about a quarter (23.7 percent) of college students got their first credit card to use for emergencies, and 57 percent only use their credit cards if an emergency expense arises.
The key here is to remember to pay your bill, which can be easy to forget if you don’t normally use your credit card and aren’t in the habit of making regular payments.