Home / Credit News / Are college kids prepared to handle credit cards?

These days, many college kids may have the option to open a credit card in their own name despite more government regulations designed to prevent them from doing so, and that can pose serious problems for young adults across the country.

A study conducted last year at the University of Alabama found some correlation between a lack of knowledge of how credit cards work and increased risky behavior on such an account, and many experts have since noted that this may be a growing concern, according to a report from the Wall Street Journal. That's because sizable credit card balances, when added to other debt obligations that many students face, can put them in a serious financial hole soon after they graduate.

In fact, the study found that those who have minimal credit card knowledge - based on a quiz containing very basic questions about account management - are twice as likely as those with even middling knowledge to max out their cards, the report said. Further, they are also more likely to engage in risky borrowing behaviors such as taking out a cash advance or letting the account fall into delinquency. Of course, those who have middling knowledge were also more likely to do all these things than those whose level of understanding of how credit card accounts work was highest.

The problem, experts say, may simply be that kids aren't imparted the right kind of knowledge before being given access to adult accounts, the report said. In the past, many have called for high schools and colleges to make financial education as much a part of the required curriculum as math or science.

"You see healthy campus initiatives about eating right and alcohol abuse," Cliff Rob, who conducted the study and is now an associate professor of financial planning at Kansas State University, told the newspaper. "We talk about grade stress and social stress. But there's rarely a component of financial health and stress. What about the financial stress students are facing right now? What about the stress of coming out of school with $60,000 in debt?"

Statistics show that between credit card balances, education financing obligations and perhaps even car payments, many college students graduate with tens of thousands of dollars in debt to their names. This can be extremely problematic for many young adults who may have hoped to become financially independent relatively quickly after they leave school.

The Credit Card Accountability, Responsibility and Disclosure Act of 2009 made it more difficult for those under the age of 21 to obtain a credit card on their own, as they now have to either have an adult co-signer on the account or provide proof they can afford it themselves. However, some have expressed concern that the requirements for proving adequate income are not stringent enough, and may lead some students to having access to accounts they can't afford.