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Credit Cards and College Students Are a Dangerous Mix

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The envelopes probably started arriving in your mailbox a few weeks into your first semester of college. The promises are tempting; you’ve got to admit that much. After all, it’s hard to say no to things like “No application fee!” “You’re pre-approved!” “Free gift!” Citibank, Bank of America, Chase, HSBC, Discover … the choices seem almost endless.

Yep, that’s right. I’m talking about credit cards.

Even though I was a commuter student, I had a mailbox on campus and I remember receiving dozens of credit card applications every month. Banks would even set up tables at school, and representatives would stand around handing out “free pens” and other propaganda disguised as gifts, encouraging students to fill out credit card applications as they walked past. They were always offering us the opportunity to apply for a MasterCard with our school’s name across the front as decoration.

Apparently things haven’t changed much over the last few years. I graduated back in 2002, and a USA Today article by Kathy Chu in 2008 states: “A study released by the U.S. Public Interest Research Group shows that 76% of students say credit cards have been marketed to them through tables set up on or near college campuses, and nearly a third of these students have been offered a free gift to sign up. T-shirts were the most common gift given, but students also received Frisbees, candy, pizza — even iPods — to fill out a credit card application, according to the group’s research.”

Partnerships between Colleges and Banks?

Oh, I’ll confess- I fell for it hook, line, and sinker. So did most of my friends and within a week or two I got my shiny new “University” MasterCard in the mail. I remember showing it to one of my high school friends when she came home on a break from her school. She pulled the exact same card – with her school’s name on the front – out of her wallet. We shared a laugh over that.

Apparently, this is not uncommon.

I read in the above-mentioned USA Today article: “Banks have also increasingly forged credit card partnerships with colleges. No national numbers are available on these deals. But by 2006, each of the largest 10 colleges and universities — through their alumni or athletic associations — had partnered with a bank to issue co-branded credit cards to alumni and students, earning the colleges up to millions in annual fees, the paper found. Banks often receive student information and exclusive marketing access at campus events.”

Even more shocking?

“A growing number of colleges are also striking similar partnerships with banks to issue ID cards that double as debit cards. In a separate survey earlier this year, USA TODAY found that two-thirds of the nation’s largest 15 universities either partner with banks to promote debit cards or are looking to do so.”

Yes, that’s right. Universities are getting kickbacks when students sign up for those school spirit credit cards. The places which are supposed to be educating you are indirectly encouraging their students to accrue debt!

After four years I received an “Alumni” replacement card which also came with a gigantic credit increase- even though I hadn’t graduated yet! Extra requirements had been added by the state shortly before I was due to earn my degree, so it took several members of my class an extra semester to earn our degrees, but the bank didn’t know that. I was an “Alumni,” all right … one with student loan debt and credit card debt.

Credit Cards are Easy for College Students to Obtain

Even with the rough shape of today’s economy, most college students admit that even though they have little or no income, it’s incredibly easy to obtain credit cards. I’ll vouch for that. I was working weekends and earning $6 an hour during college, but I had two different credit cards before my graduation.

Why does this happen so frequently? It’s simple, really. The majority of banks realize that most full-time students have parents who will help them out if they run up a high balance or can’t make a payment.

As the cost to attend college increases more and more each year, many students use credit cards to pay for tuition and books, which helps justify the need for the cards (in their mind, anyway).

It’s difficult to imagine that something tiny enough to fit in your pocket can cause so many headaches, but they can. Students’ debt is rising and many students don’t stop with one credit card. They have two, three, or more and wind up with several minimum payments due each month.

Students need to realize that just because a bank gives you a $1000 credit limit, they most likely cannot handle a $1000 balance. In fact, it would take a student more than 12 years and $1,115 in interest to pay off a $1,000 bill on a card with an 18 percent annual rate. Many student cards have rates higher than that. Experts agree that the majority of parents do not teach their children about managing money and the potential danger credit cards until it’s too late.

A lot of college students are immature enough to live in the present without worrying about the future. This isn’t a good approach to have: after graduation, you’re going to want to rent an apartment, or purchase a car or a home or something else which requires a loan. If you have a poor credit score due to late payments and large credit card balances, you may not be eligible to make those purchases.

On the other hand, a good credit score may help you out when applying for such loans. Maintaining low credit card balances and showing a good payment history is a great way to improve your credit score. This almost makes credit cards seem like a double-edged sword.

My advice to you? Be careful. Unless you absolutely, positively need it to survive, it’s probably not worth charging.

USA Today.com


Melissa Rhone+

Melissa Rhone earned her Bachelor of Music in Education from the University of Tampa. She resides in the Tampa Bay area and enjoys writing about college, pop culture, and epilepsy awareness.

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