What’s In Your Kid’s Wallet?

The other day I was in a convenience store in a major university town. Three college age students were definitely developing a game plan for major barley utilization to be topped off with some junk food. Throw in a few lotto tickets charged to their favorite credit card and a recipe for party time was baking in the oven.

This story brings me to the point that many young people are mismanaging credit cards, which is placing them in a large debt situation that can take decades to resolve.

Let’s examine the facts. According to Nellie Mae, the average freshman has 2.3 cards with an average balance of about $1,500. Sophomores and juniors have almost double the number of cards of with approximately a $2,000 balance. Fourth and fifth year seniors’ statistics sound like our prominent basketball and football teams. They have over five cards with a $2,864 balance.

Credit card marketers are extremely aggressive and very creative. Solicitations via e-mail and tables set up around campus with free smoothies and pizza not only expand the debt, but the waistline. Many times rates, terms and conditions are not thoroughly disclosed in the fine print even though this is a requirement by law.

One undergraduate at a prominent eastern university had over $38,000 of credit card debt. Divorced parents and the lotto were not much assistance, and bankruptcy would place her in the financial jailhouse for a decade. The alternative was a payback plan lasting 12 years at $500 plus per month. This situation placed plans for a new car and house on the back burner.

The good news is the percentage of students with credit cards has declined from 83% to 76%. If your child wants a credit card, limit it to two cards and attempt to maintain a $2,000 balance limit or less.

Many young people can pass the standards of learning (SOL) tests; however, they fail badly in the financial game of life, which leaves many children left behind in the real world.

The Road Warrior of Agriculture

My e-mail address is: sullylab@vt.edu

Editors' note: Dave Kohl, The Corn and Soybean Digest Trends Editor, is an ag economist specializing in business management and ag finance. He recently retired from Virginia Tech, but continues to conduct applied research and travel extensively in the U.S. and Canada, teaching ag and banking seminars and speaking to producer and agribusiness groups.

To see Dave Kohl's previous road warrior adventures type Dave Kohl in the Search blank at the top of the page.

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