University Students and Credit Cards
For an increasing number of college and university students, obtaining credit is as easy as accepting a free MP4 player or a bundle of CD’s. Across the nation more and more students are finding themselves buried in debt after accepting an offer of easy credit, sometimes on their own college campuses.
In 2004, the last year for which statistics were available, three out of every four American college students had a credit card, according to a leading student lender. In addition to this nearly half of students have at least four cards in their back pockets and freshmen have an average credit card debt of £800:00 whilst with older students its £1500:00.
As the cost of tuition rises, many students have trouble finding money for necessary expenditures such as books, living expenses and basics such as food. As this becomes more and more common place students are turning to credit in order to fill in the gaps.
Miss Chambers signed up for her first credit card when she started her first year in college and initially only intended to use it for books.
"I didn't have the money at the time, but I knew I'd be working part time within the next month and I'd be able pay it off," said Miss Chambers.
In addition to targeting young consumers such as Miss Chambers, credit card companies also go after financially inexperienced individuals who tend not to view credit cards as “real money”
It doesn't feel like money because it's just a card," Miss Chambers said.
Credit card companies and banks across the country have come to realise that targeting college students makes easy sense for their bottom line. Not only do college students tend to exceed their credit limit and only make minimum payments, but they also tend to form strong and long standing loyalty with their first card issuer.
"It's a bit of a lifetime decision," said a top manager at Discover Financial. "They get the 1st card and stay with it."
Mr. Carter got his first credit card in his freshman year and intended to use it to build credit.
"So far I think the bank I am with now is the one I will stay with for life. I've only had one problem and that was solved pretty quickly. I'm satisfied with their service and attitude towards me" he said.
Credit card issuers and banks also aggressively market to the college demographic to build brand loyalty early on. During visits to college campuses, representatives from these companies often use loud music, flashy giveaways and free food to lure college students to their tables. Many times all students have to do is fill out basic forms before being told that the card and terms will be mailed to them if they are approved.
A number of US states have already introduced laws to protect students from overzealous card companies. Twelve states, including New York and California, have passed laws that range from forbidding companies from entering college property to only allowing them to hand out information.
The General Accounting Office of the United States Congress has also conducted a full report on this practice and has compiled guidelines for students to consult before accepting any offer of credit. They advise students to be financially responsible by being sensible; looking into annual fees, annual percentage rates (APR), Interest free periods and what happens in the case of early bill payment as well as transaction fees and any hidden charges.