Credit card companies are targeting young people as their newest customers. They have displays at schools, offers in student literature and mail applications to their homes on a regular basis. One student recently told me that he has received at least one credit card offer per week since he was in high school and he has now graduated college. He states that he just throws them away unopened as he has no interest in having a credit card. He knew that while in school it would be entirely too tempting to have the availability to purchase everything you wanted and to go out to dinner more often then you could actually afford. He learned a lesson from watching many of his friends pile on debt. Unfortunately, not all students have such a mature attitude and many fall into the credit card trap.
It is understandable that when you attend college and are out on your own for the first time, you have no financial background to fall back on. The most you may have done to date is manage your allowance but that was probably frequently just fun money. You didn’t have to pay every little expense like doing laundry, buying food, purchasing supplies, etc. Although most parents supply some financial support to their college students, many do have to work and contribute towards their expenses. A majority handle this responsibility very well. Some even manage their credit cards properly and pay off balances in full each month. Unfortunately, though, there are many others who do not. These students are tempted by all of the offers they receive and eventually run up debt that they are unable to pay. They then take out another card to pay off the one that’s already in trouble. This is a very serious cycle for these young people as some of them are still paying off their credit card debts years later. They got to spend freely and live extremely well for a time, but the price for them is very high. Some parenting advice is to encourage your child to obtain their first credit card, but to help them monitor the way it is managed, staying involved.
Even though the students generally have only a small income, or none at all, when the cards are issued, the credit card companies want their business. These companies know that the students are getting an education and chances are excellent that they will have good positions when they begin their careers after graduation. Meanwhile, the companies are solidifying their position with the students and betting that it will pay off in the long run, making them customers for life. If the student is not handling the credit responsibly, the company is charging them all of those extremely high fees for late payments and being over your credit limit. This is adding to their profit margins immediately and they are still confident that this customer will pay off his balance in the future, either with, or without, the help of parents.
Tags: student credit cards
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