College Credit Cards: Helping to Build Credit or Leading Down a Payday Loan Path?
By J.J. CameronPayday Loan Writer
Have you encouraged your college-bound son or daughter to apply for a credit card? It's okay, many parents do.
“Credit is something everybody needs,” says Ed Mierzwinski, consumer program director at the U.S. Public Interest Research Group. “But many young people are getting too much credit and are unable to handle it."
The result is that balances may add up, instant payday loan applications may be filled out and the financial future of your children could be in question. According to Nellie Mae, a major provider of student loans, 76 percent of all college undergraduates started the 2004 school year with credit cards.
The average outstanding balance on those cards was $2,169.
“[To a student] a credit card seems like free money,” says Jim Boyle, president of College Parents of America. “That lure really sucks them into a situation where they’re paying for their purchase many times over because of the interest.”
Mierzwinski also worries about the kids who don’t pay off their balance each month. Could that mean they'll have to rely on bad credit payday loans in the future?
“They’re taking advantage of these kids and getting them into trouble at a young age,” he says.
The banking industry, of course insists that’s not the case.
“College kids are better than the general public at managing credit cards,” says Tracy Mills, a spokesperson for the American Bankers Association.
Prime targets: Most college students haven’t developed a credit history. They have very little income, if any. And in many cases, they have huge student loans to repay. So why do banks bombard them with credit card offers? Because students are an easy target, a prime marketing opportunity.
“If they can be in that kid’s wallet, they are more likely to have a customer for a good long time,” explains Geri Detweiler of ultimatecredit.com.
That’s why banks set up kiosks at on campus, offering T-shirts and other goodies to students who apply for a card. They can be akin to no fax payday loan lenders in such a way, preying on those in need. Parents just need to be aware.
