New Survey Says College Students are Flunking Credit Card Exams
American college students are increasingly burdened by heavy credit card debt, and their difficulties may portend wider problems with consumer debt in the United States, according to a recent report from Fox Business.
In addition, a recent survey discovered that college students are shockingly unaware of the dangers of taking out too much credit debt, and also display a disturbing lack of knowledge about how credit cards actually work.
And if the amount of credit card debt among college students continues to rise, states may soon see a dramatic increase in the number of young people filing for Chapter 7 bankruptcy.
College Students Have Alarming Ignorance About Credit Card Use
According to a recent survey published by five colleges in conjunction with Financial Literacy Month, financial literacy on college campuses seems to be dangerously lacking:
- Widespread use. First, the use of credit cards is ubiquitous among college campuses. Sources indicate that 70 percent of college students in the United States possess some type of credit card.
- Widespread ignorance. Now, the unsettling news. According to the survey, of these millions of students who hold credit cards, only one out of every six student knows the interest rate for late payments on his or her credit card. In addition, 75 percent of students do not know how large their late payment charges are, and a staggering 70 percent do not know how much they will be charged if they go over their balance limit.
- Consequences. Thanks in large part to the lack of awareness about interest rates and balance limits, more than 90 percent of college students who use credit cards are carrying some amount of credit card debt each month, according to the survey cited in Fox Business.
The numbers are frightening, and the authors of the survey did not mince words when describing the nature of the results.
According to the authors, the students surveyed “lacked even basic financial knowledge of a common credit tool” that many of them use every day for basic purchases.
Placing their tongues firmly in the cheeks, the study’s authors also wryly noted that “[t]here is no way to describe these results as a success in education of financial literacy.”
To add further mystery to the study, a large majority of the students who took the survey were business majors, who are, at least in theory, the most financially savvy students on campus.
One wonders just how bad the numbers may have been if the survey had focused on students outside the business field.