Student Credit Card ......Debts

http://www.channelnewsasia.com/stories/singaporelocalnews/view/296539/1/.html

The credit card is becoming increasingly popular amongst students and this can be partly attributed to the vigorous marketing campaigns made by the various credit card companies. However, along with this popularity also comes the problem of the massive amount of debts accumulated by students. Many have voiced concern over this, and some even suggested disallowing students without income to have credit cards.

However, I would like to point out that although it is true that many college students get into trouble with debt, so do many full time workers. When a bank gives a card to a college student and the student accepts, this is an agreement between two adults. It may go wrong (as many other adult agreements do) but the choice to enter into the agreement lies with the parties involved.

But there is a significant difference between an adult and a student – that fact that most college students do not have stable income or an established credit history, unlike adults. This is the criterion ordinarily used to determine if an individual is creditworthy.

Thus credit card companies are going against their own rule of thumb by extending credit to students. Why would they want to do this? The answer lies in profits.

Credit card companies can afford to gamble. They extend a $500 credit line to a student who is eager to buy and probably has no hope of ever paying off the balance. He will make feeble attempts, and the money goes directly to fees and late charges. If his parents step in and pay the bill for him, it's a win-win for the credit card company. If the student defaults, his credit might be ruined early on in his life, but the credit card company has, no doubt, already recouped the original $500 in late fees and penalties.

Credit card companies offer to extend credit; they do not promise to be ethical. Out of the thousands of college students they entice, a certain percent will have the ability to pay, another percent will be bailed out by parents, and the unfortunate remainder will be under duress and throw good money after bad in late fees and interest. They will also learn, only too quickly, how the friendly credit card company, waving tempting incentives to sign them up, turns ugly and vicious when the inability to pay sets in.

The majority of students are naive in money management. They go directly from their parent's home to the university dorm and thus have not been exposed to budgeting. If they are employed, those jobs are often part time or low paying. They are not yet experienced enough to deal with the intricacies of establishing a good credit history and it's impact on their future.

As a student myself, I can understand how one can easily be persuaded by attractive advertisement as well as peer pressure to get a credit card even if he or she does not have adequate financial knowledge to protect myself from debts. Thus, if a student desire a credit card, and understand how to use it efficiently, they will seek out the credit card company. The credit card company should not be stalking the student and interfering with the college experience.

Mass marketing is a common practice, but when such practices starts to create problems to a large portion of our future generation, then the credit card companies should take up the responsibility and stop marketing campaigns specifically targeted at students solely for the purpose of making profits.