Consumer Payment Card News

Students Get Top Card Use Grades

VISA released a study yesterday showing 90% of college students consider themselves good money managers. The ‘VISA Scholars & Cents’ survey of 251 students also showed that 56% of students pay credit card balances in full each month and most reserve credit card use for high-ticket items such as travel and car expenses. The study, conducted by CT-based NFO Research between July 22 and July 27, also revealed that 67% rely on money they earn during the school year. The study’s results comes on the heels of recent press articles presenting reams of anecdotal evidence of students struggling under a mound of credit card debt.

While the record number of personal bankruptcies this year has highlighted Americans’ financial illiteracy, today’s college students say they make the grade when it comes to managing expenditures against their incomes. According to the Visa Scholars & Cents study, a full 90 percent of college students rate their approach to handling personal financial matters as good or excellent.

“Based on their track records with the college market, Visa and its member banks have long regarded students as responsible users of credit, and this new study confirms that the vast majority of college students keep their spending in line with their income and pay their bills on time,” said Bob Couch, senior vice president, Visa U.S.A.

Ninety-four percent of the students surveyed recognize the importance of establishing a good credit rating while in college. More than half (56 percent) typically pay their credit card balance in full each month. By comparison, according to industry statistics, only 40 percent of cardholders pay their balance in full each month.*

While college students receive financial assistance from parents and other relatives (42 percent), more than 67 percent also rely on money they earn during the school year. Half of the students surveyed work during the school year, with 60 percent working over 20 hours per week and 66 percent earning at least $100 per week. In addition, many students (52 percent) rely on income from summer jobs to cover school-year expenses.

College students use a variety of payment tools to manage their finances, selecting checks, cash or credit cards depending on the expense. In general, the survey found that students use checks to pay for tuition (54 percent) and housing (57 percent), while relying on cash for groceries (42 percent) and entertainment expenses, such as going to the movies or restaurants (81 percent). Credit cards, according to the students surveyed, are reserved for high-ticket items such as travel (47 percent) and car expenses (44 percent), and emergencies (70 percent).

“While most college students are managing their finances well, we recognize that education in credit management is critical for responsible credit use — especially among young adults,” said Couch. “To respond to this need, Visa U.S.A, and its member banks are launching a two-tiered education program this fall. The initiative, designed to provide young consumers with the tools they need to manage their finances responsibly, includes a money management education curriculum for freshmen orientation leaders and a national campus outreach.”

The Visa Scholars & Cents study, a national telephone survey, was conducted by NFO Research, Inc. of Greenwich, Connecticut, between July 22 and July 27, 1997. The survey polled 251 college students who attended college on a full-time or part-time basis during the 1996-1997 school year and had a major credit card in their own name or were an authorized user of their parents’ credit card.

Visa is the preferred payment brand and the largest consumer payment system worldwide. It plays a pivotal role in advancing new payment products and technologies to benefit its 21,000 member financial institutions, their cardholders, and the global economy. Visa is the only consumer payment system to facilitate $1 trillion worth of purchases of goods and services in a fiscal year. Visa’s nearly 600 million cards are accepted at more than 14 million worldwide locations, including 370,000 ATMs in the Visa/PLUS Global ATM Network. Visa’s Internet address is

* Industry statistic provided by Credit Card Management Magazine.

Top Ten Tips for First Semester Finances
1. Know where you stand. Buy a small ledger and track how much you spend in the first few months. Keep your receipts and go through all your bills. Make sure you know how much you have saved and how much you owe.

2. Create a budget you can live with. Make sure it’s realistic. Budget so that you can pay off your debts and also include an amount for savings. If you want to travel during spring break, start saving for it now.

3. If it looks like it’s too good to be true, it probably is. Your mail box is going to be stuffed with all kinds of offers. The companies that offer you 10 bestsellers for a $1 or 14 CDs for $5 also expect you to pay for shipping and handling and additional orders in the next 12 months. Make sure you read all of the fine print before you send in your order.

4. Don’t buy everything now. You may be tempted to get everything right away. Before you raid the campus store, make a list of your immediate needs and then buy them at a discount store — it’s less expensive and you will not buy more than you need.

5. Look before you leap. Before going to school, see if your campus has a computer center — you may not need to buy your own computer. Wait to see if your roommate has one and is willing to share. The same goes for a refrigerator. Look into renting one. That way you will not have to worry about repairs or summer storage.

6. Consider carefully. There are many credit card offers out there — and they all offer different features. Before you sign up for a credit card, make sure you understand all of the terms. What is the annual percentage rate? Are there any finance charges? Is there an application fee? Is there a charge for cash advances? Know what you’re signing up for.

7. Create an identity for yourself. When choosing a PIN (personal identification number), be careful not to choose numbers that can be easily decoded, such as your birth date or phone number. Choosing such dates or number sequences that are easy for you to remember can be easily figured out by others through trial and error.

8. The true cost. Remember, your bank will charge you interest on the amount you owe on your credit cards. The more you owe, the higher your interest payments will be and the longer it will take you to pay off your balance.

10. Don’t go overboard. You don’t need a whole new wardrobe — learn to borrow clothes from your stylish friends. Buy posters to decorate your room, not framed artwork or the ergonomically correct, vibrating massage chair.

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