New study: Young credit card users are more responsible

October 7, 2013

If you think young people don’t know how to manage money and pay down their credit cards, then you should think again. A new study from the W. P. Carey School of Business at Arizona State University and the Federal Reserve Bank of Richmond shows young borrowers – 18 to 25 years old – are among the least likely credit card users to have a serious default on their cards. Not only that, they’re also more likely to be good credit risks later in life.

“Young credit card users actually default less than middle-age borrowers,” says Andra Ghent, assistant professor in the W. P. Carey School of Business. “Also, those who choose to get credit cards early in life are more likely to learn from any minor defaults and move on, avoiding major credit card problems in the future. Plus, they’re more likely to be able to get a mortgage and become a homeowner at a young age.” Andra Ghent Download Full Image

The new research by Ghent, as well as Peter Debbaut and Marianna Kudlyak of the Federal Reserve Bank of Richmond, is now a Federal Reserve working paper. In it, the researchers analyzed consumer data from the New York Federal Reserve Bank Consumer Credit Panel/Equifax to determine whether young borrowers are worse credit risks than others and to estimate the effect of individuals choosing to get a credit card at a young age.

The results demonstrate that part of the Credit Card Act of 2009 may not have been necessary. The act made it illegal to issue a credit card to individuals under 21 unless the person has a cosigner or submits financial information indicating an independent means of repaying the debt. It also includes a provision banning companies from recruiting credit card users within 1,000 feet of any college campus or at college events.

“Letting students apply for credit cards may actually make sense,” says Ghent. “These students are the people who want credit, need to build up a good credit history and have a steeply sloped income profile. If they don’t have a student loan, then a credit card may be the only way they can establish a decent credit history.”

The researchers found that while people in their early 20s are more likely to experience minor delinquencies (30 or 60 days past due), they are much less likely to experience serious delinquency (90 days or more past due). In fact, someone age 40 to 44 is 12 percentage points more likely to have a serious delinquency than a 19-year-old.

However, the Credit Card Act of 2009 has clearly had an impact on how many young people are getting credit cards. Individuals under 21 are 18 percent less likely to get a credit card following passage of the act, and that’s not necessarily a good thing.

“You can’t learn by just watching credit card use,” adds Ghent. “You have to get a card, pay it down every 30 days, and experience, in order to learn. It’s also hard to get a mortgage if you can’t get a credit card to build up your credit history.”

The full study is available at

ASU hosts lab safety panel for state universities

October 7, 2013

Arizona State University hosted the Arizona Board of Regents’ Tri-University Laboratory Safety Culture Conference on Sept. 27. Representatives from the three state public universities joined members from community colleges and state agencies to discuss how to successfully promote safe, department-wide laboratory practices.

The conference – the first since 2010 – addressed a fatal incident that occurred in 2009 involving a 23-year-old research assistant at the University of California, Los Angeles. The nature of this event caused many members of university scientific communities to reemphasize the importance of laboratory safety not only as an individual responsibility, but also as a cultural imperative. A man addresses a room of attendees from behind a podium. Download Full Image

Armando Durazo was a laboratory safety officer at UCLA in 2009, and now is a research specialist at the University of Arizona. He spoke about his experience during the fatal incident, and how the university handled the event as a teaching moment.

“When I teach about safety, I mention this accident,” Durazo said. “I try to use what happened there and the university’s response as a means to teach and get people to take safety measures willingly to prevent something like that from happening.”

Durazo said that the UCLA safety committee reiterated to all its students, faculty and staff about the basic, yet fundamental measures to take while in laboratories:

• Wear fire-resistant coats
• Use proper eye protection
• Prohibit shorts and sandals

Regular and surprise laboratory inspections also were mentioned as important changes to UCLA’s safety protocol.

To ensure safe laboratory environments at ASU, the university uses the laboratory safety mandates compiled by the American Chemical Society. Michael Caplan, associate professor in the School of Biological and Health Systems Engineering, explained that to him and his committee, laboratory safety is a collaborative process within each unit or group of researchers.

“The basic idea is that by having these unit-level safety committees you have safety by faculty, staff and students and safety for faculty, staff and students,” Caplan said. “It’s the idea that if you get the people who are responsible for safety being the same people who need to be safe, then that’s where you build culture.”

Pedro Silva,
ASU Business and Finance

Wendy Craft

Marketing and communications manager, Business and Finance Communications Group