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Survey Highlights Importance of Student Credit Education

[Saturday, February 13th, 2016]

Everyone makes a financial misstep now and then. And often, the first major money mistakes people make come early in life.

Credit cards are the most likely place for a young person to go wrong, according to a recent research poll. Sixty-eight percent of folks surveyed said they’d made a serious mistake with credit before their 30t h birthday, including exceeding their credit limit, missing a payment, having an account sent to collections, or defaulting on an account.

The survey results point to the need for young people to have better financial literacy education, especially when it comes to credit cards.

Mistakes made when you’re young can have a lasting impact

Even though people may be young when they make these financial missteps, those youthful indiscretions can have a serious impact on their future financial health. Three-fourths of those surveyed said credit mistakes made before age 30 negatively affected their quality of life.

What kind of mistakes did people make that followed them into older adulthood? Sixty-one percent said they’d been turned down for a credit card because of mistakes they made in the past, and 26% even had to move back home and live with their parents for a while after a financial fiasco.

Education makes a difference

When asked whether they’d had any kind of financial education before entering college, only 28% of people said they had—and most of that came from their parents. When they got their first student credit card, 69% of respondents didn’t understand what a credit score was, and 73% said they would have been able to avoid making credit-related slip-ups if they’d had a better education regarding financial literacy and credit cards.

Student credit cards are available to young people who don’t have any credit history. They generally have a low credit limit that allows them to get their feet wet using credit without getting in too far over their heads. However, missing payments or maxing out a student credit card can still result in poor credit that can take time to mend.

The survey was based on responses from 1,051 people between the ages of 31 and 44, and member data from a large company with more than 45 million members.

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