Their research found that 37% of students surveyed had a credit card. Students in Scotland (44%) were most likely to have a credit card. Those at university in Wales (33%) were least likely.

Female students carry a higher average balance. The average credit card balance for a female student in the UK is £255.50, compared to £173.20 for male students.

Students in the Eastern and South Eastern university regions were most likely to carry a larger balance at £363.70 and £360.60 respectively. Students in the South West (£125.10) and East Midlands (£129.50) carried the smallest.

For many students the appeal of credit cards were functionality. Compared to other student finance products such as a loan (80%) and overdrafts (64%), credit cards (37%) are less widely held. But those that have them use them for their functionality and the added protection they provide rather than as a source of debt.

Halifax itself offers the Halifax Online Guarantee. Its card has a number of features that help students stay in control of their finances, such as free monthly text alert reminding cardholders when their next payment is due, free weekly text alert service keeping cardholders informed of their balance, and a maximum credit limit of £500 that can be reduced to £100 if students wish.

Ken Stannard, head of Halifax Credit Cards, explains: “Our credit card is designed to help students stay in control of their finances. With a free text alert service it’s easy to monitor your balance and remember to make repayments on time.”

The Children’s Mutual is calling for a change in the way society thinks about funding higher education.

With news that 42 per cent of this year’s undergraduates plan to work part-time in a bid to afford higher education, and with 78 per cent of parents saying they think that the credit crunch will make it harder for them to fund their children through university, the organisation says university fees should be saved for from early childhood.

David White, Chief Executive of The Children’s Mutual, said: “It is becoming increasingly apparent that we need a sea change in the way that many parents and their children fund university. For those approaching higher education in the next few years the Government has a clear student finance package in place but for parents of younger children, one way to stave off the financial nightmares of the current university generation could be to start saving now.”

The Children’s Mutual says that many young people show a better awareness of the need for financial planning than their parents. Nearly a third of youngsters aged 11 to 18 are putting money aside for higher education. A third of parents realise they are not saving enough for their children’s futures.

Mr White said: “It is great to see that today’s teenagers are aware of the costs involved with going to university and are taking steps independently to try and avoid the high levels of debt that are now common amongst graduates. But the average cost of three years at university now sits at £40,400 – a huge amount of money for any teenager to find.”

Currently four times more teenagers are heading to university than 30 years ago, but according to The Children’s Mutual, many young people and their families are only just starting to realise the financial implications of their higher education aspirations. The average graduate leaves university with a £17,500 debt and according to the report, “little hope of paying it off.”

The report also uncovers that unlike their younger siblings who are saving for the future, many over 18s hadn’t thought it necessary to save for university and think that student debt is “normal” and that “a ‘culture of debt’ is accepted as a normal part of life.” This is despite the consensus among these young adults being that “having such large debts from student loans made it easier to fall into further debt.”

The research, commissioned by The Children’s Mutual and compiled by the Social Issues Research Centre (SIRC), further found that young men are more likely than young women to be saving for university (32 per cent versus 28 per cent).

Notes for student media editors
Photo credit CCL

The Children’s Mutual is the choice of 1 in 5 parents for their child’s Child Trust Fund (CTF) account and named the UK’s Best CTF Provider 2006 and 2007.

David White, Chief Executive of The Children’s Mutual, is available for comment. Please call Elspeth Rothwell on +44(0)20-7781-2366 or visit the website: http://www.thechildrensmutual.co.uk