College Students Turn to Credit Cards as Costs Rise

The credit card exposure also matters for lenders and the broader consumer economy. Adalytica’s Household Debt Stress Sentiment gauge has fallen to 30, labeled “Fear,” while its Savings Rate Sentiment sits at 52, or neutral, suggesting households remain cautious and liquidity buffers are uneven. In that setting, students are likely leaning on cards not for discretionary splurges alone but to bridge tuition, rent, food and transportation gaps — a behavior that can delay delinquency at first, but often raises future write-off risk if graduates enter a softer job market.

For investors, the trend cuts two ways. Card issuers can benefit in the near term from loan growth and interest income, especially when balances rise faster than paydowns. But higher usage among younger borrowers can eventually pressure charge-offs if underwriting is loosened or if unemployment ticks up. That risk is especially relevant for lenders with large consumer books, including American Express, Capital One and Synchrony Financial, all of which have reported monthly credit performance data in recent filings.

The deeper narrative is that America’s young adults are being pulled into the credit system earlier and under tighter financial conditions than previous cohorts. Stronger wages and a still-resilient labor market have kept the economy from cracking, but they have not restored affordability. With borrowing costs still above pre-pandemic norms and consumer sentiment about debt deteriorating, student card reliance looks less like a temporary convenience and more like an early warning sign for the next phase of household credit stress.