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When students come to college they make new friends – their names are Visa, Discover and MasterCard.

A new study shows, however, that students may be wising up when it comes to how they treat these friends.

In 2004, the average outstanding balance on undergraduate credit cards was the lowest since 1998, according to the study by Nellie Mae, one of the largest student loan companies in the country.

For the study, Nellie Mae analyzed credit bureau data from 1,413 randomly selected college students who applied for loans from the company in August of 2004.

This average outstanding balance of these applicants was $2,169, a 7 percent decrease from the balance reported in 2001, which was $2,327.

The study also found that 76 percent of the undergraduates in 2004 began the school year with credit cards, an 8 percent decrease from the number of students with cards reported in 2001.

“The fact that average credit card usage has declined among undergraduates in the past three years can be viewed as a sign that the message to use credit responsibly is reaching its intended audience,” said Marie O’Malley, vice president of marketing for Nellie Mae.

Some colleges offer programs and various forms of financial advising to educate students about smart credit card use.

The University addresses the issue in the “First Year Success Series,” a series of workshops aimed at first year students to help them make the transition into college.

A workshop titled, “Budgeting Skills and Credit Cards,” will be offered to first year students Oct. 17 at 7:30 p.m., according to the University’s Web site. Students can go online to reserve a spot in this workshop.

Even with programs like these, overuse of credit cards remains a persistent problem, one that can send students spiraling into debt.

“While the sharp increases in credit card usage among college students that we have seen in recent years appear to be leveling off, undergraduate students and credit cards remain a dangerous combination,” O’Malley said.

This is especially true in the Midwest, where the study showed students have the highest debt levels. Half of the Midwest students included in the study had four or more credit cards.

Senior Lindsay Quartini can identify with these students, having five credit cards herself.

“When kids come to college they don’t want to financially depend on their parents, and they see credit cards as a way to be independent,” Quartini said.

Quartini said she tries to be a responsible credit card user however, and she does her best to pay off the balances on each card so she is not stuck paying exorbitant interest charges.

“Finance charges are ridiculous, especially for college kids,” Quartini said.

Credit card companies can charge higher interest rates – better known as finance charges – for college students because they typically don’t have good credit rating, said professor Sung Bae, who teaches in the finance department.

“Students usually have no regular source of income so they are less likely to pay off their full monthly balance,” Bae said. “They are more likely to pay the minimum balance, allowing the credit card companies to charge interest.”

Many students like credit cards because they are so convenient, but Bae’s advice for students is to avoid using credit cards simply because they are easy to use.

If students want a convenient method of payment they should use debit cards instead, Bae said, because you aren’t actually borrowing money.

On the other hand, if students are responsible and use their credit cards wisely they can build up good credit history, which will make obtaining large loans easier in the future.

“All college students need to be educated about personal finance, not just credit cards,” Bae said.

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