With the Freedom of Student Credit Cards Comes Responsibility
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by: barrywaters
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Word Count: 525
When I was an undergraduate student, you could walk through the student union on any given day and be handed a couple applications for student credit cards. In the spring and fall, there were big booths set up outside giving away shirts, mugs, music and cash. The banks were trying to lure new applicants for student credit cards and it worked. It was an effortless sell and it appeared that anyone would be approved. I did not know one person who was denied. I can think of just as many students whose balances grew and grew, because they only paid the minimum required payments. You can see why it was an easy sell. Most of us were poor students, but had appetites for independent spending. With credit cards we could be wild and free. Oh, the places we could go. The debts we could tally.
Many university administrations and state governments are now restricting solicitations for student credit cards on campuses. They have begun to realize that a lot of students are taking on the responsibility of a credit card before they have the knowledge and income to support it. Students are an easy target, after all. A fair number of them barely make ends meet, have student loans and are on their own for the first time. Handing out student credit cards to young people who may not understand the long term effects of debt is not the noblest undertaking. The results of a U.S. PIRG survey made public in March of 2008 examined the credit card behaviors of students. Freshmen who were responsible for paying their own bills on student credit cards had an outstanding balance of around $1300; seniors, an average of over $2500. One quarter of the students in the study had paid a late fee at some point. 5 percent of the students surveyed had been so behind on payments on a card that it was canceled.
Banks who offer student credit cards claim they are doing so responsibly. Student credit cards provide a chance for students to build a foundation for their credit history. Banks say the results of the U.S. PIRG survey paint an exaggerated picture of the spending habits on student credit cards. Other studies indicate that a mere 30 percent of students actually have credit cards and the average balance carried is less than $500. A lot of banks provide free budgeting workshops and financial planning seminars for students. They feel that student credit cards can be a responsible and invaluable resource.
College administrations want to continue to allow banks to market student credit cards. They simply want to assure that banks offering them on their campuses are doing it in a way that is not predatory or misleading. Student credit cards can be a great financial tool for students, if they are used responsibly and with full respect to what can happen if the bills are not paid.
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Get more info about student credit cards, try www.getsmart.com/credit-cards.
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