Most college students have, mismanage credit cards

In recent years, there have been greater efforts made to prevent young adults under the age of 21 from obtaining credit cards in their own name, but now it appears that many still do, and mismanage their accounts when they get them.

Currently, 70 percent of all undergraduate college students have a credit card in their own name, and about 91 percent of those borrowers carried a balance from one month to the next, according to a study entitled "Financial Literacy and Credit Cards: A Multi Campus Survey," published in the International Journal of Business and Social Science. More troubling, however, may be that some 36 percent of all respondents have two or more credit cards in their name, though that number seems to be falling from similar surveys conducted in the past.

Close to half of those who had their own credit card said they used them only for emergencies, and 36 percent said they used the accounts fewer than five times per month, the report said. However, about 13 percent said they used their cards frequently, and 1.1 percent said they used them more than once per day. However, younger students were more likely to use their credit cards regularly than their older counterparts, possibly indicating that with age comes greater responsibility in using credit.

Only 9.4 percent of those surveyed paid their balances in full every month, meaning 90.6 percent of those with cards let their debts carry over and collect interest, the report said. This is a marked decline from similar polls in the past that showed between 32 and 38 percent of students paid their balances in their entirety at the end of every month.

Lack of knowledge when it comes to penalties

Only 14.6 percent of students knew the interest rates on their credit card, and researchers believe that because there was no way to verify the APRs on these cards, that these respondents may have been overstating their knowledge, the report said. Similarly, 75.7 percent of respondents said they had no idea of the charges they would face for making a late payment, and just 29.2 percent said they were aware of the fees for going over their card's credit limit. Altogether, fewer than 10 percent were aware of all three of their card's interest rates, late charges and over-limit penalties.

The Credit Card Accountability, Responsibility and Disclosure Act made it more difficult for younger consumers to obtain credit cards in their own name, requiring them to either have an adult co-signer on their account or otherwise provide proof that they can afford such an account on their own. However, when seeking any credit card account, consumers should first check their credit reports to ensure their standing is as good as it should be. Occasionally, unfair markings can have a negative impact on a borrower's credit score, but working with a credit repair company can help to clear these up.