06 Nov How Reckless is Credit Card Marketing to College Students?
Visit the Google search engine and type in the search term “student credit cards.” You will not be surprised to find that the top sites listed are databases directly marketing to students that allows them to search for a credit card that best suits their needs.
The site http://www.findcollegecards.com/ provides a list of card offers that encourage and reward students for using their new found credit to purchase items at restaurants, apparel stores, supermarkets, drug stores, gas stations, and coffee shops. The issuers of these cards offer appealing features to students such as “no minimum income required” and “no co-signer needed.” Benefits are listed as “unlimited cash advance checks” and you can also earn “amazing rewards” such as VIP passes to Music Television’s spring break event. The interest rates on these cards typically start with a 0% introductory rate followed by an APR ranging from 0% to 19.24%. The site attempts to warn students of the dangers of irresponsible borrowing with the following “FAQ” section:
How Can I Establish Credit? Establishing credit is usually easier than you think. First, we are assuming that you’re a fresh college student looking for your first credit card. This is a great first step to establishing credit. Once you finally find that card you want and get approved, make sure you don’t rack up too much money too quick. Sometimes students get over their head and they’re not able to pay it. You will want to keep a low balance and you will want to make your minimum payments each month, there’s no exceptions to this. If you miss one payment, it can kill your FICO score!
The site CreditCards.com also provides a list of card offers similar to the site mentioned above, www.findcollegecards.com. This site also focuses on “cool” credit card designs and names such as the “Monogram Collection,” the “Music Television Platinum Select Visa,” the “Student Tropical Beach card,” and the “No Hassle Cash card for students.” This site also tells a potential student applicant what type of credit they need to be approved. In addition, there are several prepaid credit card options for students. The site also attempts to warn students of the danger of irresponsible borrowing with three links to articles entitled “Survey: Grad Students’ Credit Card Debt Averages $8,216,” , “Don’t Default on Student Loans,” and “For Gen M, Pizza’s on Par With Good Credit.”
The site CollegePlastic.com focuses less on the “cool factor” and contains more links and articles regarding responsible borrowing such as “Beating the Credit Card Companies at Their Own Game,”, “Avoiding Credit Card Late Fees,”, and the “College Plastic’s Credit Tip of the Day” which can be found on the CollegePlastic.com home page.
The information these potential student borrowers should have before diving into the world of credit is information regarding responsible credit card use that explains finance charges, annual fees, cash advance fees, late payment fees, the cost of carrying a balance, and the impact and importance of maintaining a good credit score. Information such as this is readily available from the Federal Trade Commission (www.ftc.gov) and from other sites with web pages devoted to responsible college student lending such as http://www.collegeboard.com/student/plan/college-success/9139.html.
In addition, college students and their parents should be aware of the emotional dangers of students getting in over their heads with credit card debt. Two stories of such students were featured in the film Maxed Out. (See embedded video below.) An article written by Dustin Tyler Joyce on April 23, 2007 gives a great synopsis that all college students and their parents should read before borrowing:
Each year, thousands of bright young students walk on to college campuses, eager about a new life experience and excited about prospects for the future. Yet the average freshman receives eight credit-card offers in the first week at college. Maxed Out interviews two women whose children were swept up by the deceit of easy credit. One evening, the daughter of one of the women called her mother, distraught because she had just lost her part-time job and didn’t know how she would be able to make payments on her credit-card bills. Her mother reassured her not to worry about it and that they would talk about it the next day. Shortly thereafter, her daughter was found dead in her dorm room, her credit-card bills scattered across her bed. She had hanged herself. The son of the other woman, Jane O’Donnel, was a National Merit Scholar at The University of Texas at Dallas. He continued to receive credit-card offers in the mail, even after he had hanged himself not knowing how to face his tremendous credit-card debt. The viewer realizes that these are real people—who had killed themselves because they were in so much debt—when their mothers bring out photos of their deceased children. (According to Jump$tart, 45 percent of college students are in credit-card debt, with the average debt over $3,000.)
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