Fewer undergraduates than ever have credit cards, and it’s a good thing.

At the beginning of the school year, as either a new or returning student, it’s very easy to get paralyzed by the cost of everything and fall into the trap laid by the sweet siren call of credit cards. Surprisingly, the songs used to be much louder.

Only a few years ago on campuses nationwide, credit card companies came to actively entice freshmen students into being cardholders. Eyes newly open and souls itching to test newfound freedoms of adulthood, they were succulent and easy targets.

An 18-year-old with a credit card in hand but no parental supervision could easily do some damage. But with personal debt rising across the board, it became very clear that this convenient credit was tipping the balance into something quite unfavorable.
In comes the Credit Card Accountability and Responsibility Disclosure Act of 2009 or Credit CARD Act for short.

The Credit CARD Act greatly increased transparency in financial statements. The fine print was no longer fine. Companies were forced to put out all of the dirty information that often tripped up customers. It was presented in a way that consumers could easily digest, instead of 20 pages of legalese.

And the students, those bright eyed and bushy tail people ready to take control of the world and their finances, found things to be a lot harder.

Some of the rules that came with the act included not sending pre-screened credit card offers to anyone under the age of 21. Universities and colleges had to inform students of agreements and contracts for marketing credit cards.

Most notably, campuses were highly encouraged to limit on-campus marketing of credit cards. Also, creditors were forbidden to offer college students any tangible item to persuade them to apply if the process happened on campus or a school-related function.

Was the Credit CARD Act effective for students? According to Sallie Mae, in 2009, 91 percent of all undergraduates had at least one credit card. However, in 2012, Sallie Mae, the nation’s top financial services company specializing in education, reported that 35 percent of all undergraduates had a credit card.

Sallie Mae also pegged 2013 to follow the four-year trend of having an even lower reported percentage of undergraduates with credit cards than the prior year. With all these measures to shield them, fewer undergraduates than ever have credit cards, and this is only for the best.

I’ve noticed tons of so-called financial counselors trying to change this trend. The new message for young people is to get out there and build your credit. The message is so positive that few, if any, mention the downside or go into the breakdown of what exactly goes into building a credit score.

One of those key pieces is the amount of credit you have versus your actual income. I remember way back when one of my freshman friends had three credit cards. She made sure she paid them all off on time. However, sometimes she used one to pay off the other. This is a way to hurt your score.

Also, just the fact that she had three lines of open credit was enough to negatively affect her score to a degree. Building a good credit history is a bit more complex than simply having a credit card.

This decline in card ownership will only benefit everyone in the long run. When making purchasing decisions under duress and with limited financial means, it’s easy to max out the limit for things that seem like needs.

Dreams turn to nightmares when bills stack up like telephone books.

Fran Walker is a senior finance and accounting major. Her column appears weekly. She can be reached at fwalke01@syr.edu.

Published on September 4, 2013 at 12:54 am