No Income, Can I Still Get a Credit Card?
By Kurt O'Keefe, Attorney at Law on Sep 17, 2007 in General Bankruptcy Information
Heck yes, even in these days of tightening credit, if you are a college student, even if you have tens of thousands of dollars of student loan debt, and no assets, you can get a pre-approved credit card.
Business Week has a series with more details.
A related scandal is that the colleges take money from the lenders for exclusive rights to push their particular brand of credit card on the captive student population.
But one scandal at a time.
Now, if you or I apply, while lacking any income, we would be laughed out of the booth. But many of the credit card companies set up booths, on campus, to sign up willing 18 year olds.
Reminds me of a drug pusher giving fee samples. But that may be slanderous to the drug pusher.
In the article linked above, a creditor protests that they circulate all sorts of educational materials, so that the victims, I mean, the students, will understand what they are getting into.
Of course, many students do not, and bankruptcies, and even suicides, result. Younger people are more prone to despair and do not see the way out of a situation that seems hopeless.
$10,000 of credit card debt may not seem overwhelming, but couple it with a six figure student loan balance and no job on graduation, and it could seem bleak indeed.
One of my big issues with the credit card companies is this: they have a business model of lending money where profitability is based on the customer NOT paying according to the terms of the credit card contract. All those zero percent balance transfer offers, how do they make money?
Well, people miss a payment, and then default interest rate, late fees, et cetera , kick in.
Gee, what are the odds a student, with no income and no assets, might miss a payment?
Some consumer advocates, as quoted in Business Week, propose, as a solution, more government regulation.
Color me past believing the government can help.
My remedy? Before they can recover anything, make the credit card companies prove to a jury that the student understood all the consequences of signing up. And, a signed contract on any pre-approved offer would be inadmissible as evidence. Also, the burden would be on the credit card company to prove how the student was going to repay the credit without borrowing the money somewhere else.
If they cannot, they lose.
If you liked that post, then try these...
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