Vision Credit Education, Inc.

Getting a credit card is a whole lot easier than it used to be. In the past, individuals with steady, full-time jobs and no bad credit history struggled to even qualify for a credit card. Now, over 4 billion credit card offers are mailed out to Americans every year.

A search on the internet for “easy-to-get credit card” will give you pages and pages of sites offering you credit cards that either don’t refuse any applications or allow bad credit.

Considering how easy it is for individuals with bad credit to obtain a credit card, it makes sense that individuals with no credit history, like college students, can obtain credit cards easily, as well. Even though the current financial market is in crisis because banks gave home loans to people who couldn’t afford them, banks are still targeting college students for credit cards despite the fact that most have no job or credit history.

A 2008 survey by the U.S. Public Interest Research Group found that 80% of students reported having received direct mail from credit card companies, and 22% said they received an average of 4 phone calls a month from credit card companies.

Not only are students bombarded with credit card offers in the mail and over the phone, they are accosted on their own college campuses. In fact, 300 of the country’s largest universities collectively pocket over $1 billion every year from deals made with credit card companies for marketing privileges on campus. Most of the deals involve the university furnishing the card company with its students’ personal contact information, like telephone number, e-mail address and home address. Not surprisingly, these deals are intentionally kept highly confidential.

Often times, these companies are not completely honest in the methods they use to get students to fill out credit card applications. While free food or other goodies is the usual tactic, some feel the need to intentionally mislead students. Some request personal information from students without explaining what it is for. Others wait until the last possible moment to let students know that they are filling out an application.

Given the unusually high exposure students have to credit cards, it’s not surprising that the majority of graduating students have at least one credit card. According to Nellie Mae, one of the largest student-loan providers, 56% of undergraduates get their first card at 18, and 91% of students have at least one credit card by their last year. 56% of undergrads have four or more cards by the time they graduate. Nellie Mae also reported that the average outstanding balance on undergraduate student credit cards was $2,169 in 2005.

Some may think that students are only using these credit cards for unnecessary purchases that are irresponsible, which is why they are in so much debt. However, students are using their credit cards to pay for things like textbooks, meals, transportation and even tuition. A survey by the U.S. Public Research Groups found that 24% of students with credit cards used them to help pay tuition.

Since the price of almost everything has been increasing, such as food costs, gas prices, tuition, etc., students are finding that credit cards can help ease the burden of higher prices. So, while some students in debt may, in fact, be acting irresponsibly with their credit, there are quite a few that are only able to make ends meet by using credit.

So, considering college-aged individuals represent the riskiest demographic for these credit card companies, why are they insistent on targeting them? Here are some reasons why:

• College students are seen as potential long-time customers, and these credit card companies are interested in building company loyalty
• Degree-seekers have more potential to be able to repay their debt once they graduate
• Many students’ parents are willing to take care of debt accumulated by their children
• They are financially inexperienced, for the most part, and don’t fully understand the consequences of credit card debt

While credit card debt isn’t optimal for anyone, it’s especially destructive for college students because:

• Credit card debt can lead to depression, which negatively affects school performance and social relations, there have been incidences where college students committed suicide due to seemingly insurmountable credit card debt
• Bad credit stays with you, bad credit earned as an undergrad can bar you from getting a loan for grad school or a new house/apartment/etc., some students even go as far as filing for bankruptcy
• Since a college student is at the very beginning of his/her adult life, the credit card company or collection agency can attempt to collect from him/her indefinitely

All these statistics appear pretty depressing at first glance. However, there are several reasons to be hopeful. First, educating students about the dangers of credit card debt is widely believed to be the most effective way of keeping them out of it. Presently, they simply lack the experience and financial know-how, but that is quickly changing as financial information is becoming more easily accessible, and the dangers of debt are being more widely publicized.

Also, the number of students entering college with a debit or ATM card is increasing, which allows them most of the conveniences of a credit card, but allows the student to charge only as much as they have in their account. Warning: banks have created overdraft programs that allow customers to take out more than what is in their checking account for a hefty fee.

When it comes to colleges entering into somewhat unsavory deals with banks and credit card companies, legislators and consumer activists are working on measures that limit the presence of these institutions on college campuses. U.S. Public Interest Research Groups student chapters have launched a “Truth About Credit” campaign that urges school’s to adopt six principles aimed at encouraging responsible card marketing.

These six principles are: banning gifts for filling out applications, requiring card promotional material meet school posting regulations, increasing student financial education, denying access to student contact information, forbidding card companies from sponsoring student groups and school departments, and discouraging credit card terms that take advantage of students.

In short, while student credit card debt is increasing, awareness is increasing, as well, and that appears to be the best cure.

Related Link

Shrinking Student Loan Options