This week on Experts on Credit, we’re talking a lot about college students and credit. The Finance Headlines highlights the importance of teaching kids personal finance tips. The Credit Nightmares blog offers an interesting take on college students and credit, providing data from a study done by the U.S. Public Interest Research Group. The study found a number of interesting facts about college student and credit bloopers:

Seniors in college had more than double the credit card debt reported by freshmen. That’s not too shocking when you think about it; four years of classes and naturally, you will have more debt than when you got your first credit card. But the numbers are high; seniors reported an average balance of more than $2600. That’s pretty significant when the kids in question probably only have a part-time job, if they work at all.

25% of survey respondents stated that they have paid at least one late fee since getting their first credit card. 6% of college students surveyed said that they have had a credit card cancelled due to non-payment. Ouch. 66% of kids surveyed stated that they had “at least” one credit card.

The optimum time to discuss applying for credit cards with kids is right before they leave for college. They’ll be inundated with offers for their first credit card once they leave home. Give children a solid foundation for managing personal finance and you’ll help them stay on track once they leave the nest.  

College students can benefit from applying for their first credit card. Having an established credit history at the time of college graduation can help young adults get jobs, insurance, apartments, car loans and home loans. But college students need to use caution when they compare and apply for their first credit card in order to avoid a credit nightmare.

The U.S. Public Interest Research Group did a study of more than 1500 college students from 40 colleges in 14 states. The study began in the fall of 2007 and ran through February 2008. The study provides important data about how college students use credit cards. According to the Public Interest Research Group study, kids use credit cards in “significant numbers,” which isn’t a surprise to regular readers of the Credit blog.

However, a real concern that arose from the study is the way that many college students are using their first credit cards. Late fees, delinquent payments and high balances were found far too often in the study. In addition, college students who applied for credit cards in the past and defaulted on their payments had significantly higher balances than kids who had never defaulted in the past.

Before college students apply for credit, they should compare credit cards to find the right card for their unique needs. A balance transfer card can help eliminate or at least reduce high credit debt. And student credit cards are designed for the unique needs of kids in college. Get tips to help you talk with kids about the dangers of defaulting on their credit and the importance of establishing a solid credit history before they head off to school.

 

Celebrity Tori Spelling, a favorite of the Celebs and Credit blog, is no stranger to credit card debt. The actress and former star of “Beverly Hills 90210” made headlines once again recently with her new autobiography, “sTORI Telling.” The star has found herself in the news again and again, primarily due to arguments within the Spelling family. Tori Spelling was famously “cut” from her father Aaron Spelling’s will, receiving less than $1 million of the famed TV producer’s estimated $300 million fortune. The celebrity recently admitted that’s she’s struggled with credit card debt, even verging on bankruptcy.

Growing up in a wealthy family was part of Tori Spelling’s downfall, says the actress. The celebrity admits to racking up credit card debt without thinking about the consequences as a result of growing up in a millionaire’s home. These days, Spelling is a regular on the Home Shopping Network, and her reality TV show, “Tori & Dean: Inn Love,” details the actress’ many attempts to make money through ingenious business ventures.

If you aren’t a celebrity, credit card debt may seem like an endless well. Transfer high interest debt to a low interest credit card or a balance transfer card and become a financial star now.