Dr. Manning warns that the credit card industry has sought to create the impression that credit cards are plastic money rather than debt.19 Student Monitor, a New Jersey–based marketing research firm, notes that more than half of students at four-year colleges have at least one credit card, usually by the end of the freshman year.
Forty-one percent of these students carry an average balance of $584 and tend to spend an average of $131 a month.20 Generally, students must be eighteen years of age before they can apply for a card. Interest rates may be based on the student’s income and whether the student has a job during school or is close to graduation. For parents concerned that their children are not entirely ready to manage financial responsibility, two interesting options are available. The first is the prepaid card for which parents designate the amount of money to which the student has access. The second type of card is a traditional credit card that permits parents to set credit limits and track the account via a toll-free number or company Web site. College Parents of America, a national parents advocacy group, calls these two plans “cards with training wheels.”