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rob carrick

Give university students some credit.

The banks certainly do. A study of more than 15,000 Canadian university students completing their undergraduate programs found that almost nine in 10 have a credit card, and that 26 per cent have two or more cards. By all means, let's be concerned about this surprisingly high level of card ownership among students, but first we need the right context. Most importantly, students appear to be diligent about repaying what they owe on time.

The data on student credit card use comes from the latest survey of graduating undergrad students compiled by the Canadian University Survey Consortium, which is a group of universities co-operating to run surveys that tell them more about their students. The survey's headline numbers on student debt as of mid-year are encouraging – the average amount owed by those with debts was $24,579, down from $26,700 in June, 2009 (the last time this survey was done).

The credit card numbers show that we're getting an incomplete picture of student debt by focusing only on loans provided by governments and banks. Unlike overall debt, credit cards have become more of a factor in students' lives. Just over 80 per cent of graduating students had one or more credit cards back in 2003. The comparable number rose to 88 per cent in 2009 and 89 per cent this year.

Let's start with the bad news on how this is playing out, which is that the average level of debt among the minority of students with unpaid balances on their credit cards rose very slightly to $3,444 in 2012 from $3,440 in 2009, and from $1,279 in 2003. More encouraging is the fact that 82 per cent of cardholding students reported paying their balances off in full each month, compared to 76 per cent in 2009 and 72 per cent in 2003.

Figures from the Canadian Bankers Association show that just over 65 per cent of the broad population pays its credit card bills in full each month. So give students some credit – they're not the financial illiterates some people think they are.

And yet, a minority of students are getting themselves into deep trouble with their credit cards. The credit card payment calculator presented by the federal Financial Consumers agency of Canada shows it could take 18.5 years to clear a card debt of $3,444 if you just make the minimum payment every month.

In my latest book, How Not to Move Back In With Your Parents: The Young Person's Complete Guide to Financial Empowerment, I try hard to trash the idea of students with little or no employment income using credit cards. The reason is that, with interest rates of close to 20 per cent, they're a trap for students who spend carelessly. And, no, I don't buy the idea that it's smart to get a credit card as a student because you get a head start in establishing your credit rating. Get a job, then get a credit rating.

But here's reality: Banks actively promote cards to students, who have shown themselves to be a most enthusiastic audience. In our consumption-driven economy, a credit card is a membership card.

So here's what we have to do about students and credit cards. First, recognize that the issue of student debt has to include credit card debt as well as money owed through government and bank lending programs. Not a lot of students carry card debt, but those who do are digging themselves in deep.

Second, let's avoid the blame game in figuring out why some students are using their cards so ruinously. A narrative that comes up when students and credit cards are mentioned is that today's young adults are spoiled, entitled and clueless about what it means to live within their means. Refuting this is a long-term trend of students consistently getting better about paying what they owe on their cards.

Third, let's make sure all financial literacy efforts aimed at teens and young adults deliver the message that buying things you can't afford with a credit card is both the worst and easiest-to-avoid mistake in all of personal finance.

Credit cards are as common on university campuses as beer and raging hormones, thanks to the banks. Some students are burying themselves in card debt, but most aren't. Let's give them some credit for that.