April 2005

Up for discussion: Credit card use

Katy Maloney is interim director of Financial Aid. (Debbie Aldridge/UC Davis)

Receiving that first credit card offer has become a rite of passage for many students, but for some it has led to a mountain of debt.

About 45 percent of freshmen and 88 percent of seniors own credit cards, according to a survey by Student Affairs Research and Information at UC Davis. While 87 percent of freshmen reported that they always pay their entire balance by the payment due date, only 52 percent of seniors did.

So how can parents help guide students to a healthy relationship with consumer credit?

"Open up the dialogue," says Katy Maloney, interim director of the UC Davis Financial Aid Office. "Ask the questions, 'Do you really need a credit card? Why and how will you use it?'"

Credit card use not encouraged

Maloney has seen what can happen to students who get carried away with credit cards. Some begin adulthood with a poor credit rating. For others, the situation becomes so severe that they must quit school in order to work full time to repay their debts.

"We do not encourage credit card use, unless, of course, it is for an emergency," Maloney says. "Even then, students should know how they are going to pay it back."

The Financial Aid Office offers an undergraduate student expense budget to help students and their parents get a clear picture of basic costs. However, Maloney says, credit card debt is not part of that equation because her office is focused on education-related expenses, not consumer debt.

Student accounts a form of credit

Students and parents may also want to discuss the use of their student accounts. The campus billing system is a way for students to pay their fees, campus housing bill and health center fees. With their registration card, students may also use their student account to make charges at the UC Davis Bookstore and other places on campus.

Maloney says some students get into trouble with their student account by, for example, running up large bills at the bookstore purchasing clothing, computers or other items. "People just need to remember that the student account is a form of credit," she says.

Credit brochure available

Those who would like to learn more about credit can pick up a copy of "Credit: How to use it wisely," a brochure provided by the UC Davis Bookstore. It is available on the bookstore's first floor at the cashier's office. The brochure includes information on credit cards, ways to use credit and manage money, and a quiz to help students evaluate their spending habits.

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