When my niece Lauren came home recently from her first semester at Spelman College in Atlanta, one of the first things we talked about was money.
I asked Lauren if she needed any. She gave me that look teenagers give when asked an obvious question.
Then I asked her if she had applied for a credit card. I wasn't going to launch into a lecture. I just wanted to see if she, like many college freshmen these days, had been tempted by the plastic devil.
"No way, Aunt Michelle," Lauren said. "When it comes to your money, you don't play around with something like that. I know that if I got a credit card, I would tell myself that I would just splurge a little. But you can get in debt real fast."
"You go, girl," I said, giving her a high-five.
I've said it before and I'm going to say it again and again: College students should not get credit cards until they are at least about to graduate and have lined up a full-time job.
Alas, I know I've largely lost this battle. There are parents, college students and credit card executives reading this who can't wait to argue the opposite.
In fact, researchers at Georgetown University's Credit Research Center conclude in a study that students can learn to manage a credit card.
Most young adults who qualify for a credit card while attending college have smaller balances, lower credit limits and use their credit cards less frequently than others in the same age range, concludes the research paper, which is being published in the November 2004 issue of the Journal of Student Financial Aid.
Credit card companies couldn't wait to trumpet this news.
"I think this is a good indication that students are becoming wiser about the use of credit," said Daniel F. Drummond, a spokesman for Your Credit Card Companies, an ad hoc group of six financial service companies that have banded together to provide credit education to the public.
Drummond was eager to highlight some key facts from the Georgetown study. The group did not finance the research but nonetheless wanted to pass on these results:
* 87.9 percent of student accounts are current (paid as agreed), which shows that college students manage credit cards as responsibly as the general population.
* The average balance of $552 for a student account is approximately one-third the size of the average balance of a non-student young adult's account ($1,465) and one-fourth that of an average older adult's account balance ($2,342).
* College students are more likely than older adult account holders to pay off their credit card balances in full each month.
Ah, but the credit card companies conveniently left out of their news release these findings, also from the Georgetown research paper:
* Compared with older account holders, college students with credit cards are more likely to exceed their credit limits.
* Student credit accounts are more likely to be delinquent. In an average month, 12.1 percent of students are delinquent 30 days or more, compared with 8.1 percent for older adults. And the incidence of serious delinquency (accounts 90 days past due) is 3.1 percent, nearly triple that of older adults.
* Student accounts have a higher rate of charge-offs than those being used by older adults.
* In a given month, 18.4 percent of student credit users were assessed fees for either being late or over their credit limits, much higher than the 12.5 percent of older adult accounts.
Despite those negatives figures, college students should have access to credit, said Michael E. Staten, director of the Credit Research Center and co-author of the student credit-usage paper.
"I think of a credit card as a power tool," Staten said. "It is powerful and it needs to be treated with respect because you can get into trouble if you don't pay attention to how it is used."
He went on to say: "We know that the vast majority of people . . . will have a credit card. I would rather have young people learn to use it when they have lower balances than when they have a really big credit line."
Can college students use credit wisely? Sure, many can.
However, other evidence shows that when consumers use credit, especially young people, they overspend, according James A. Roberts, an associate professor of marketing at Baylor University.
"Research shows that when you use a credit card you overestimate your wealth, you are less sensitive to price and you are more likely to purchase compared to those who write checks or pay with cash," Roberts said.
There is no need for college students to rush into using credit. They've got plenty of time to be debtors. In their formative financial years, they need to learn to get by on cash before mastering the art of using a credit card.
Michelle Singletary discusses personal finance Tuesdays on NPR's "Day to Day" program and online at www.npr.org. Readers can write to her at The Washington Post, 1150 15th St. NW, Washington, D.C. 20071 or send e-mail to firstname.lastname@example.org. Comments and questions are welcome, but please note that they may be used in a future column, with the writer's name, unless a specific request to do otherwise is indicated.