In today’s tough economic times, college students still remain a prime target for issuers of credit cards. Tons of credit card brochures flood the nation’s college campuses to lure in thousands of potential first-time cardholders.
The US House Financial Services Committee on Financial Institutions & Consumer Credit recently held hearings to address credit card practices that affect college students. Among the findings were the following statistics:
- 80% of college students say they receive direct mail about credit cards.
- 22% of college students say they’ve get at least four phone calls a month about getting a credit card.
- 56% of college undergraduates get their first credit card at age 18.
- 91% of college students have at least one credit card by their last year.
- 56% of students carry at least four credit cards when they graduate.
A credit card is useful to a student because the cards are:
- an emergency cushion
- the preferred method to shop online
- a way to get purchase protection
- the first step of a credit history that will eventually assist in buying a car or a house
To credit card companies, college students are a profitable market. Cost per new card holder is low and students tend to keep their first credit card on into their first years of adulthood. Even if the student defaults, parents often pay off credit card debt. The persistent marketing, when combined with little financial experience and excessive purchase opportunities, causes many college students to end up in serious debt by the time they leave school.
In February 2010, the federal government enacted legislation on how credit card companies can interact with students. The new law bans issuance of credit cards to anyone under eighteen. Anyone under twenty-one who cannot prove financial independence must have an adult co-signer.
Although the new law does provide some protection for college students, it is still up to the individual to manage their own credit use wisely. Credit card debt help is a valuable resource not only for college students, but for anyone managing credit card debt.
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