Students begin a new chapter in their lives when they enter college. Apart from the feeling of independence and freedom, for many, it’s the first time they’ve lived on their own. For the first time they are on their own to make all the decisions for themselves, whether it is about doing laundry, planning their own meals or some major advancements regarding their financial lives such as getting a credit card.
This new liberty sometimes overwhelms the student to sign on the dotted line for the credit card, just to get that feeling of being powerful to buy anything you want.
In order to get the students to sign up for the credit cards, the credit card companies offer many tempting deals to motivate the students such as, “Get a free T-Shirt when you apply for our credit card”; “Choose a free CD”; or “Free Pizza when you apply!” The little credit card “kiosks” are spread all over the campus in some cases.
To attract the students, companies set up shops in front of the pizza parlors where students can get their free pizza for applying, or in front of the dining hall or center of campus where students tend to socialize in between classes.
Some students are not tempted but the majority of students are interested enough in the deals to stop by the table, and with about 50% of these students signing up for credit card offers, you can guess the marketing is effective.
Student credit cards are not a bad idea, but it’s dangerous for those who don’t know the consequences and thus get into trouble. Most of the student credit cards offer low credit lines of $500 or $1000, and it’s very easy for students to charge up to the maximum limit quickly. As the students enjoy the buy-now and pay-for-it-later experience, they get carried away to get new cards for a different free t-shirt or a free dinner. After all, what’s another monthly payment of $20 going to do?
The thing which many college students don’t realize is that their $500 credit cards are costing them up to four times or more in interest when they make just the minimum payment each month. Furthermore, if the student is unable to pay for a month or misses it due to some reason, the late fees and increased interest rates from non or late payments will result in ridiculous amounts of money that may add up.
Students go to college to create a better future for themselves. Higher education and a degree is meant to earn them a higher income. When these students build up thousands of dollars of credit card debt, they graduate into the real world with a bad credit history and before even they start their professional career, they’ve got to work two or three jobs to make ends meet.
It is important for parents to educate their children about the credit card companies. Universities should take a step and introduce the students to the basics of credit cards and their pros and cons before the students fall a prey to these companies.
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