When I was an undergraduate student, you could walk through the student union on any given day and be handed a couple applications for student credit cards. In the spring and fall, there were big booths set up outside giving away shirts, mugs, music and cash. The banks were trying to lure new applicants for student credit cards and it worked. It was an effortless sell and it appeared that anyone would be approved. Everyone I knew who applied for a credit card on campus had one in their hands within a week or two. Yet I knew plenty of people who only paid their minimum balances each month and kept ringing up additional purchases on their cards. The allure was understandable. It was like free money during a time when most of us had little. Ah, the freedom. Oh, the places we could go. The amount of debt we could ring up.
Many university administrations and state governments are now restricting solicitations for student credit cards on campuses. They have begun to realize that a lot of students are taking on the responsibility of a credit card before they have the knowledge and income to support it. Students are an easy target, after all. Most are strapped for cash and are experiencing more freedom and independence than ever before. Handing out student credit cards to young people who may not understand the long term effects of debt is not the noblest undertaking. The results of a U.S. PIRG survey made public in March of 2008 examined the credit card behaviors of students. Freshmen who were responsible for paying their own bills on student credit cards had an outstanding balance of around $1300; seniors, an average of over $2500. A late fee had been incurred by about 25 percent of those surveyed. Over 5 percent had their cards canceled, because of delinquency.
Banks who offer student credit cards claim they are doing so responsibly. They say having a credit card allows students an opportunity to budget and establish a relationship with a bank. Banks also cite studies that indicate that the use and abuse of student credit cards is not as bad as the U.S. PIRG study claims. Other studies indicate that a mere 30 percent of students actually have credit cards and the average balance carried is less than $500. Many credit card companies are now offering free seminars to help students learn to budget and manage their finances responsibly. They believe there is a role for student credit cards in the financial development of students.
College administrations want to continue to allow banks to market student credit cards. They just want to protect their students from any exploitive marketing practices. Student credit cards can be a great financial tool for students, if they are used responsibly and with full respect to what can happen if the bills are not paid.
Many university administrations and state governments are now restricting solicitations for student credit cards on campuses. They have begun to realize that a lot of students are taking on the responsibility of a credit card before they have the knowledge and income to support it. Students are an easy target, after all. Most are strapped for cash and are experiencing more freedom and independence than ever before. Handing out student credit cards to young people who may not understand the long term effects of debt is not the noblest undertaking. The results of a U.S. PIRG survey made public in March of 2008 examined the credit card behaviors of students. Freshmen who were responsible for paying their own bills on student credit cards had an outstanding balance of around $1300; seniors, an average of over $2500. A late fee had been incurred by about 25 percent of those surveyed. Over 5 percent had their cards canceled, because of delinquency.
Banks who offer student credit cards claim they are doing so responsibly. They say having a credit card allows students an opportunity to budget and establish a relationship with a bank. Banks also cite studies that indicate that the use and abuse of student credit cards is not as bad as the U.S. PIRG study claims. Other studies indicate that a mere 30 percent of students actually have credit cards and the average balance carried is less than $500. Many credit card companies are now offering free seminars to help students learn to budget and manage their finances responsibly. They believe there is a role for student credit cards in the financial development of students.
College administrations want to continue to allow banks to market student credit cards. They just want to protect their students from any exploitive marketing practices. Student credit cards can be a great financial tool for students, if they are used responsibly and with full respect to what can happen if the bills are not paid.