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Fewer college students with credit cards, less overwhelming debt

For many people, going to college for the first time meant the first time living independently away from parents and family. It also once meant obtaining the first credit card, which many looked at as another ritual of reaching adulthood. However, following the recent recession in Texas and the rest of the U.S., the number of college students carrying credit cards has declined, which could help in curbing overwhelming debt among college students.

Along with the recent recession, a 2009 law which tightened regulations on credit card companies also contributed to the decline in college students signing up for credit cards. The law increased monitoring and disclosure requirements for credit card companies. It also tightened regulations on the ability of credit card companies to offer instant approval of cards to younger people. Now, applicants are required to have a history of independent income or a co-signor prior to being able to obtain a credit card.

Although some believe that this will prevent younger people from being overwhelmed by debt, many financial experts suspect this will keep some from building their credit ratings, which are based upon a proven ability to handle debt. Establishing a strong credit history is important for obtaining better interest rates on loans which may be needed later on in life. Many financial experts still suggest that students obtain a credit card in order to build early credit histories.

Despite the increased regulations aimed at protecting college students in Texas and elsewhere, it is still possible that students will end up with overwhelming debt caused by credit cards. This can be stressful and can cause long-term negative financial effects. One common solution which many college students might consider is bankruptcy. This option can sometimes have the ability to discharge credit card debts in order to provide a fresh financial start.

Source: The Washington Times, "College students more wary of credit card debt," Joshua Eferighe, April 1, 2013

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