Managing money, paying bills and keeping a good credit score is a balancing act at any age. But college students, an especially vulnerable group to making rookie mistakes, seem to be handling multiple payment options fairly well.
The use of credit cards by college students is on the rise, according to a recent survey by Sallie Mae, the company you may associate with student loans. Today’s college students report they now carry an average of five credit cards and have an average balance of $1,183. This compares to 2016, when students reported having only three cards and an average balance that was about 30% less.
Why Students Carry More Credit Cards
The vast majority of students reported their #1 reason for having a credit card was to build credit. Many said they believed having multiple cards allowed them to do that more quickly. And, they also said they liked the rewards the cards offered.
Is having several cards a negative? It doesn’t appear to be.
The vast majority of those surveyed were paying their bills on time, about half were saving money from their paychecks, and more than half were tracking what they spent. Students who had credit cards were more likely to rate their money management skills as excellent, while those without credit cards were more likely to say they did not know their FICO® Score. The credit card users tended to have greater awareness of the benefits of credit and be more knowledgeable about money and credit than those without credit cards, according to the study.
Despite carrying higher balances, students’ credit card payment habits have not changed since 2016. About 60% reported they pay their balances in full every month, with fewer than 1% paying less than the minimum. (The 2016 students reported 63% and less than 1%, respectively). One difference: 30% of students in 2019 relied on their parents to pay their credit card bill, which compared to 25% in 2016.
What’s in Their Wallets?
Maybe more students are pulling out credit card more often? Not necessarily. Debit cards, cash and mobile pay are still more popular choices.
A majority – 85% – carry debit cards. And, 81% of those surveyed this year also used cash to pay for smaller transactions (compared to 86% three years ago). However, mobile pay has surpassed debit card use to become the most popular payment option – 86% used mobile pay in 2019 compared to only 77% in 2016. (Venmo, PayPal, Apple Pay and Google Pay were top choices.)
Still, students surveyed were significantly more likely to use their credit card (if they had one):
- for online purchases (50% in 2019 versus 12% in 2016),
- to buy bigger ticket items (23% in 2019, compared to 16% in 2016), and
- when they had a merchant card for the store (31% in 2019 versus 3% in 2016).
So it comes as no surprise that writing a check is becoming rare among college students, even if they don’t use credit cards.
But will these students prefer to get one of the three Sallie Mae branded cards? How you use a credit card should help determine the best card for you, so do your homework and compare a few. The three Sallie Mae card versions offer:
- cash back feature,
- no annual fee,
- cell phone insurance,
- free FICO score,
- Introductory APR of 0%,
- mobile app notifications, and
- option to temporarily lock the card.
** Sallie Mae’s national study was between December, 2018 and January, 2019, and surveyed over 2,400 young adults – 810 current college students, 804 recent college graduates, and 805 young adults who left college without a degree.