College Credit

But even if they are showing up with cards in their wallets, it's a safe bet that they haven't been taught how to handle them. After all, it's likely that their parents are in debt as well. According to Harvey Warren's group, the National Consumer Council, the average U.S. household has ten credit cards, with an average interest rate of 18.9 percent. The average total balance is around $8,000, and almost half the households in America report having a difficult time making their minimum payments. In 1998, personal bankruptcies hit an all-time high of 1.4 million, although that number has declined slightly in recent years.

"Credit is not magic, and kids need to learn that," says Danette Tidwell, program manager for the Texas Jumpstart Coalition, a Dallas-based nonprofit that advocates more financial education in Texas schools. Tidwell cites a 1997 national study by lender Fannie Mae showing that only 5 percent of high school seniors scored a C or better in a personal finance assessment quiz.

In addition to learning about credit cards, she says, Texas children need to be taught the basics of saving and checking accounts, insurance and investing. The coalition, which works to put schools in touch with the numerous free or low-cost financial literacy programs offered by banks and credit unions, is backing a bill in the Texas legislature that will make some form of financial education mandatory in Texas schools.

Not that Tidwell expects a warm reception among educators. Teachers in Texas are pressured to ensure their students pass the Texas Assessment of Knowledge and Skills test, says Tidwell, and credit card lingo isn't on the exam.

"If they would consider putting things on the test relative to financial education, it would make the test more relevant," she offers, stressing that a teacher doesn't have to revamp her entire lesson plan to squeeze in a little instruction on dollars and cents.

"A course can be taught in pieces of 30 minutes," she says. "You can find so many resources out there already, you don't have to reinvent the wheel."

MasterCard, for example, recently teamed up with the College Parents of America organization to distribute 175,000 brochures over the past four years to college students and their parents. While the colorful materials come with MasterCard's logo on them, a card application isn't included.

But, Tidwell says, that information is bound to be biased. "They describe the credit card as if it were a debit card -- you can pay for your housing, your books" with the card, says Tidwell. "I think, 'Oh, dear, that sounds too easy.' Students need to learn about budgeting."

It's also important to understand that, contrary to popular belief, credit cards are not the best way to establish credit history.

"I think one main reason that college kids obtain credit cards, aside from prestige, is they know how important credit is," says Rudy Cavazos of Houston's Money Management International, a nonprofit credit counseling service.

Cavazos has a weekly money matters segment on the Telemundo network and has spent years counseling college students in debt. He has seen countless young adults who believe that getting a credit card is the first step on the road to one day buying a house.

"Your first choice to start good credit is establishing a relationship with a financial institution like a bank or credit union," he says. "You handle those accounts responsibly, you don't write bad checks, and you deposit consistently. The loan officer at that bank or credit union is going to look at that when you come in to ask for a loan, and it doesn't matter if your credit file says you own an American Express."

Credit cards are also not a good way to pay for college, says Cavazos; lower-interest student loans are always a better option. In his years helping students in trouble, he's come to believe that it's better to take more than four years and finish college on fiscally solid ground than it is to land in massive credit card debt.

"I talked to one student who was in a master's program to become a teacher, and who was in credit card debt for $125,000," he says. "She said she lived off her credit cards. She'll never pay that off."

Despite such horror stories, Cavazos realizes most college students will still get credit cards. He recommends picking one -- and only one -- with at least a 20-day grace period, no annual fee and a reasonable interest rate. For students who get in over their heads, he advises talking to individual creditors first to see if a lower interest rate can be negotiated. If they choose to consolidate their debt, students should be sure the service they choose is accredited by the National Foundation for Credit Counseling, and that only nominal fees of $10 or $20 are charged. Fly-by-night consolidators do exist: One took $1,000 from Fuller before closing up shop and disconnecting its phone lines.

Jennifer Fuller used to go shopping and pay for a round of drinks at the bar. Now she works. Constantly. Any moment spent not earning money is, to her, a waste of time. "This week, I clocked out with 70 hours," Fuller says, referring to her job at the Riviera Grill downtown. "I asked to work extra. I don't need to waste the morning sleeping in and getting up at two-thirty."