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. The things we could buy. The debts we could tally.
There has been a lot of discussion within campus administrations and the government recently about marketing strategies regarding student credit cards. The main concern about the mutually beneficial contracts between universities and banks is that that rely on students opening new credit card accounts and maintaining balances on them. 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 contend that their relationships with universities and marketing strategies for student credit cards are not harmful to students. Student credit cards provide a chance for students to build a foundation for their credit history. Banks say the results of the U.S. PIRG survey paint an exaggerated picture of the spending habits on student credit cards. 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 feel that student credit cards can be a responsible and invaluable resource.
College administrations want to continue to allow banks to market student credit cards. They simply want to assure that banks offering them on their campuses are doing it in a way that is not predatory or misleading. If they are used appropriately and with an understanding of the long term effects of debt, student credit cards can provide students with a sound and dependable financial resource.

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by: barrywaters
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