Not very long ago credit cards were reserved for those who had a steady source of income.A college student couldn't get one unless a parent co-signed.
Over the last decade things have changed.The usual image of a hard up student has changed into one of a financially independent person, all thanks to the credit card.
But now suddenly questions are being asked as to whether students are graduating with too high a level of debt.
Credit card companies are marketing aggressively to college students.They are offering students, free lunches, T shirts and other gifts if they fill up a credit card application. Unfortunately students pay more attention to the free gifts rather than the terms and conditions of the credit card.
Every year, come fall and the beginning of a new academic year, attention turns to credit card companies and the marketing policies followed by them for students.Several universities have now placed restrictions on the card marketing companies to prevent indiscriminate issue of credit cards to students.But credit card companies are able to get around these restrictions fairly easily.They simply set up shop across the street from the campuses that place restrictions on their activities.
Many card issuers also strike deals with colleges paying them millions of dollars a year in return for exclusive access to their students.This is now turning into an important source of finance for these universities.
The reasons why college students are such a prized catch are not far to seek.They earn more during their lifetime than those who don't go to college and some can also rely on their parents to clear their credit card debts.Added to this is a growing market with several million new potential customers becoming available every year.This is important in an over saturated market with each household having 14 cards on an average.Students also tend to be more loyal and will usually stick to the company that gave them their first card.Once they graduate their financial needs increase immediately.Car loans, mortgages and various other financial requirements need to be met. Existing relationships tend to expand to take care of changing financial needs.
But the flip side is that maybe credit cards are too easily available and it is not unusual for a student these days to get a second one without having made a payment on the first.
The truth is that students pay more to credit card companies by way of late payment fees or by way of fees for exceeding their credit limit than older people.So students are targeted by card companies also because they are a more profitable proposition.
Since credit cards are indispensable there are some things a student can do to stay clear of debt.To start with resist free gifts.Sign up for a credit card only after fully understanding its terms and conditions.Please compare several cards before choosing one.Fees structures and interest rates can vary significantly.A card with your university's logo may not be the best deal.Finally don't buy what you cannot afford.Learn to pay off your balance on time and in full every month.
Avoiding credit card debt will make college a more enjoyable experience.