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When we turn 18, the world suddenly changes. We’re officially “adults.” We can vote. We often move away from home. And, we can get credit.

For most of us, credit cards play a daily role in our adult lives – whether we use them or not. The temptation to “charge it” always lingers. We must consistently exhibit self-discipline as we peruse the aisles of a grocery store or skip by storefronts at the mall.

As a young adult, the credit landscape can be a bit rocky. Whether we give into temptations or need extra funds for an emergency, it can be easy to rack up a lot of credit card debt in a very short amount of time.

An Over-reliance on Credit Cards

According to an April 2009 study by Sallie Mae, graduating college seniors acquired an average credit card debt of more than $4,100, which is up $2,900 from the same study conducted in 2005. Nearly one-fifth of graduating seniors carried a balance of more than $7,000.

This study also notes that very few college students overall – only 17 percent – regularly paid off all their credit cards each month. Another 1 percent had parents, a spouse or another family member paying the bills. The remaining 82 percent carried balances, and thus incurred finance charges each month.

The more debt we carry, the more interest we have to pay. Plus, creditors assess higher rates to those with the most debt. For young consumers at the bottom of the career food chain, those interest rates can be crippling.

New Regulations to Protect Young Consumers

In 2009, the federal government stepped in. New laws were passed to protect young consumers, making it more difficult to acquire credit cards.

Consumers under the age of 21 now need an older co-signer with a good credit history in order to obtain a card. Or, they must be able to show proof of income. Additionally, credit card issuers can’t lure young consumers as easily. They are no longer allowed to offer free incentives to induce students to sign up for credit cards within 1,000 feet of a campus. Colleges and universities are also being urged to adopt policies that further restrict credit card marketing on their campuses.

Time will tell if these regulations pay off.

Tips for Navigating the Credit Landscape

Despite the dangers associated with an abuse of credit cards, the reality is that young consumers need to use them (in a limited manner) in order to establish a good credit record. This is necessary to obtain home or auto loans in the future.

The following tips will help young consumers navigate the credit landscape and keep interest rates at manageable levels:

Do Your Research – It’s important to shop around for the best interest rate before settling on a card. Be cautious of slick advertisements, and don’t fill out the first application that comes your way. You can compare credit card offers online at or

Read the Fine Print – The advertised interest rate isn’t necessarily the long-term interest rate. Credit card companies can offer low introductory rates for a minimum of six months. Read the fine print to find out if the interest rate will increase after a specified time period. It’s also a good idea to steer clear of variable rate credit cards, which can move up and down.

Don’t Fall for Gimmicks – Focus on finding a credit card with a low interest rate rather than a complex rewards or point system. You’ll save much more money in the long run. Freebies aren’t typically available until you’ve spent thousands of dollars on the card. If a deal seems too good to be true, it probably is.

Limit Your Credit Use – One credit card should be sufficient for most young consumers. Acquiring multiple credit cards increases the chances that you’ll collect more debt. Also, limit your credit card use to small purchases you can pay off each month, or for emergencies. A sale at the mall isn’t an emergency.

Check out our Financial Calculators to test different interest rate scenarios.

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