Student Credit Card Debts Rise Faster Than Inflation

A new report which was issued this month has revealed that although the jobs market may be set to recover, credit remains uncertain for younger American consumers.

TD Economics issued the report, funded by TD Bank Group, which shows that credit card debts among students in the United States has rapidly increased and a much faster rate than the rate of inflation.

The report warns that unless these young consumers receive much needed education in budgeting and personal finance, then they may well face life after graduation filled with several years of being restricted from accessing the best in insurance policies, mortgages and credit card deals.

The authors of the report have suggested that it is a lack of any accountability which is allowing young consumers to get into huge amounts of debt without any real understanding of the impact credit card defaults and unpaid student loans might have on their future.

While students should be making some financial sacrifices while in school, such as cooking over eating out and maybe purchasing second hand books, instead over half of all students in the United States are carrying balances on four or more credit cards. There is also data to suggest that the majority of American families actually avoid discussing money at home which leaves our students without the foundations on which to build their own financial decisions.

The report was authored by economists Craig Alexander, James Marple and Chris Jones who analyzed various statistics and data from a variety of sources including Sallie Mae,the United States Department of Education and the Federal Reserve bank of Cleveland.

They established that relationships between employers and the American workforce are changing, resulting in a need for more Americans to start saving for retirement rather than relying on a company pension. However, the report indicates that students are barely able to cover current living expenses and are unable to, or simply neglect to, contribute funds to a retirement plan.

The report also highlights the fact that community banks and local financial institutions are able to play a key role in educating young consumers. The authors recommend that introducing financial education to Americans at a young age can not only help with financial decisions in future but can also help to strengthen math and reasoning skills.

The report suggests that a combination of financial literacy is schools and mentoring from bank professionals will help young consumers to be less intimidated by managing money.

Similar Personal Finance News

• Fed Survey Shows Drop In Student Credit Cards – August 4, 2011
• New Wolfpack Card Combines Prepaid Debit and Student ID – April 30, 2012
• Visa Research Pinpoints Low Emergency Funds – May 8, 2012
• Citi Sees Increase In Credit Card Default – October 10, 2011
• Students Face Surcharge When Paying Tuition By Credit Card – July 6, 2011
• Credit Cards Best Option For Currency Exchange – July 19, 2011
• High Credit Scores Don’t Always Have Benefits – January 30, 2012