Marketing_Credit_Cards_on_College_Campuses

Marketing Credit Cards on College Campuses I believe that credit card companies should not be on campus marketing to students because this is a form of predatory lending as college students are accumulating too much credit before they graduate. Credit cards are a form of loan given to qualifying applicants that must be paid back monthly with usually high interest rates. Students today have many types of debt, student loans, and other bills to worry about and a credit card payment should not be one of them. Some credit cards can have an interest rate of up to 29.99% annually. With interest rates this high, it would take a person over 15 years paying just the minimum amount on a $5,000 loan. I feel strongly regarding credit lending of this type because I owned a credit counseling company for over four years and have seen the devastation of college students and graduates that are overwhelmed by credit card bills and student loans. My counseling office was in Huntington, West Virginia, exactly two blocks from Marshall University. I had about 300 customers after the second year and a little over 30% of my customers were students or recent college graduates. This was very troubling for me to actually see first-hand that some of these students never had a chance to succeed financially, credit-wise. I got a similar story from many of the students. They were purchasing food, clothes, cell phone bills, and other living expenses on their credit card. I feel that the credit gave some of the students a false sense of reality, thinking why pay cash now when I can pay back a little each month' Before these students knew it, they were at their credit limit and unable to pay their monthly bills. Credit card debts coupled with student loans that need to be re-paid after graduation most of these students found themselves in a huge hole before they were even given a shovel to try and get out of it. The average college student carries an average of $2,700 according to Nellie Mae and about 10% of the students can rack up balances of over $7,000. The USA Today reports that the average college graduate will owe over $19,000 in student loans. The total average debt of a college student according to those 2 sources would be around $21,700. This is a significant amount of debt to have to worry about and ultimately have to pay for after graduation. I can honestly say that I no longer have any credit cards or payments and have found that I quit buying many things I just didn’t need. I believe that this essay can make other students truly consider if, in fact, they do need a credit card account. There are many other ways for a student to pay bills than swiping a credit card. Nellie Mae goes on to say that 78% of college students have at least one credit card, 32% have at least four credit cards, so on average, a college student has nearly three credit cards. The minimum payment on most cards is $35 or 3% of the balance. Many students do not realize that when the credit card limit is $5000, then the minimum payment would actually be $150 a month. This was a shock to many of the students that walked into my office asking me to explain why their bill had gone up substantially. This began to be an ongoing theme and I soon realized that many young adults are not fully educated in the terms of credit and credit card use. Some of these students were receiving six to ten credit card offers per week. How hard is it to avoid the temptation of a $5,000 credit card when you are a broke college student' The mentality of “I can get whatever I want now and I can pay a little each month” starts to take over after a while. This is predatory when a company is offering a vulnerable young adult too much credit than he or she could possibly handle. Paying the monthly bills for living is tough enough, why add hundreds of dollars in credit card payments to the mix' I was asked to perform some wise credit use seminars for the students at Marshall University. I feel that it is important to know the pitfalls, benefits, and negatives involved with credit use. According to the United States Department of Justice, 19% of all bankruptcy filings are by college students. So, basically 1 in 5 people will graduate college with a bankruptcy on their credit report, before they have had a chance to succeed in their chosen profession. This statistic is alarming on so many levels. Education at a young age, starting with parent education of their children, is necessary is assuring that a young adult will have a good handle on the proper use of credit. Most everyone will be making a major purchase after college like a new car or a home. In order to get a loan for a home or car, an applicant must have good credit to be approved for a loan. It is very discouraging to anyone that graduates, gets a good paying job, but cannot get a loan from the bank because of pact credit history. President Obama has stated that he wants to see stricter guidelines on loans from banks because of the rise in foreclosures across the country. This means that banks will be raising the minimum credit score required to obtain a loan. This is when one’s credit history can become their friend or their foe. Credit is a necessary evil in today’s society, as most major purchases in one’s life will require the assistance from the bank in the form of a loan. The first thing the bank will do is to pull the loan applicant’s credit report and check their history and credit score. With the push from The President, banks are making is tougher to obtain a loan with a below average credit score. Having past due payments and even worse, a bankruptcy, on the credit report can raise the interest rate considerably or even prevent a person from getting the loan. If a student can get a credit card with a small limit and a low interest rate, it can be a beneficial thing if the payments are made on time. It does take credit to get credit, but one cannot get in over their head. Credit cards are needed to reserve hotel, rental cars, and many other things that we frequently need. To say that all credit is evil would be an invalid statement. Excessive credit pushed on by all of the credit card companies to an unsuspecting college student is, and should be considered a form of predatory lending and should be regulated. I do not feel as if most college students actually grasp the importance of credit and credit use and credit card companies take full advantage of this. I feel that some steps have been taken toward educating young adults about credit and how it works, but it has not been enough thus far. I feel that the current debt ratios as well as bankruptcy rates speak for themselves when it comes to lack of education and understanding about the credit industry. The major credit card companies will prey on every weakness, and this includes stupidity. Lack of knowledge is not an excuse when the credit card company charges the maximum interest rates allowed by law. They will always tell you “It was in the terms and conditions, didn’t you read those before you signed for your credit card'” Most credit card applicants did not. Sources: Nellie Mae, The USA Today, Tri-State Financial Solutions, Credit.org, CIA.gov, The Ironton Tribune, The Herald Dispatch, The Daily Independent CERTIFICATE OF ORIGINALITY I certify that the attached paper is my original work. I am familiar with, and acknowledge my responsibilities which are part of, the University Of Phoenix Student Code Of Academic Integrity. I affirm that any section of the paper which has been submitted previously is attributed and cited as such, and that this paper has not been submitted by anyone else. I have identified the sources of all information whether quoted verbatim or paraphrased, all images, and all quotations with citations and reference listings. Along with citations and reference listings, I have used quotation marks to identify quotations of fewer than 40 words and have used block indentation for quotations of 40 or more words. Nothing in this assignment violates copyright, trademark, or other intellectual property laws. I further agree that my name typed on the line below is intended to have, and shall have, the same validity as my handwritten signature.   Student's signature (name typed here is equivalent to a signature): William S. Gore