Credit card companies are going to all lengths to get students to sign up for cards nowadays. Students might be motivated to get them seeing the free t-shirt or free pizza offer, but the high price that they’ll have to pay later is nothing compared to these small gifts. Not knowing about the consequences, the students will not only get into debt, they will also spoil their credit rating and hence put their future at steak.
Knowing all this, some student groups have gone so far as to classify these marketing tactics as predatory. But then, why are banks still allowed to market credit cards to students? It is possible that they just might have a contract with the host college.
University of Michigan Example
For example, Bank of America has a contract for $8.4 million with Michigan State, and a $25.5 million contract with the University of Michigan. JP Morgan Chase is also contracting with about 25 universities. These deals grant the banks access to students’ names and addresses, and in return the banks also send some money back to the universities whenever a student signs up for one of the cards.
Students living beyond means
Although according to the critics, this system is setting students up for spending beyond their means, but the promoters insist that the contracts bring in revenue that is much needed by the schools. A Bank of America spokesperson stated that this is done to encourage responsible spending and the student credit card limits are kept low, about an average of $2,500. Arizona State also partners with Bank of America to provide educational seminars about getting out of debt and staying debt-free.
Universities Leaking information to Credit Card Companies
This type of targeted marketing is not new, and has been done with student loans too. But it is not ethical of the universities to pair up with credit card issuers and leak out all the contact information for their students, alumni, staff, and even people who hold season tickets to college sporting events. These pairings provide marketing opportunities for banks and in return the struggling campuses get some revenue.
Say no to pushy salesmen
Students feel that colleges have no right to tech them about the dangers of debt and credit cards when they are giving their contact information themselves to the credit card companies. But at the end of the day, it’s up to the students themselves to learn about debt, responsible spending, and reasonable credit card terms and conditions. Once a student gets to know about all the details, he will have the power to say no to pushy salesmen and decide for a good future for himself.
