Having saturated the working adult population with credit card offers, credit card companies are now banking on a new market: college students.

Financial experts warn students to avoid getting caught in the credit card trap.

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"Students are a heavily targeted demographic by credit card companies. It's hard to avoid credit problems given that credit is so easy to come by and socially acceptable. Add credit debt with a student loan and by graduation they have debt equivalent to a mortgage," said University of Alabama-Birmingham Professor Lance Nail.

College And Credit

Under regular credit criteria, many students wouldn't be able to get a card because they have no credit history and little or no income.

But the market for young people is valuable.

Nellie Mae, the student loan agency, found that 78 percent of college students had credit cards in 2000.

Credit card companies have moved on campus to lure college students into obtaining cards.

Their aggressive marketing, coupled with students’ lack of financial experience or education, leads many students into serious debt.

Warning Signals:

• Undergraduates with credit cards carried an average balance of $3,071 in 2000. (Source: National Postsecondary Student Aid Study)
• Half of all college students with credit cards don’t pay their balances in full every month.
• 58 percent of college students reported seeing on-campus credit card marketing tables for two or more days within a one month period at the beginning of the semester.
• On a test of personal finance skills administered to high school seniors, students averaged a score of 57 percent, an F on any grading scale. Only 5 percent of the seniors scored a C or better.

Avoid A Credit Crunch

To avoid debt problems, Nail suggests the following: make a budget, restrict use to one credit card and when possible, use only cash.

If paying with a credit card, add 20 percent -- the finance charge -- and ask yourself if it is worth it.

Make payments on time to avoid late fees.

"And most of all remember it’s not what you have, it's what you are that matters," added Nail.