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Student Credit Card Debt

Monday, July 21, 2008

It looks like scary stories about students who graduate with big debts will soon be a thing of the past. According to the research by Student Monitor, the average balance on student credit cards is down 19% compared with last year.

It's no secret that college students are a very appealing target for credit companies, even despite of a weak economy and subprime mortgage crisis. The reason for this is quite obvious, lenders try to build a productive relationship with young clients to keep them loyal when students are still in college. Read more about student credit card statistics!

The idea of obtaining a first credit card when still in college is not that bad. For making a fresh start in the credit life, will be an ideal choice. A single plastic specially designed for student needs is a valuable financial tool that may be of use when building credit and cover monthly expenses like utilities, tuition, rent, books and more.

It's all well and good, but oftentimes creditors persist in their attempts to advertise credit products for college students. College campuses are overflowed with special credit offers for young adults. A recent survey has shown that 80% of students receive direct mail from lenders. 75% of students have stopped at the credit marketing table at least once.

Lenders are becoming even more creative when it comes to credit advertising. Nowadays, the choice of various incentives is not limited to free T-shirts and frisbees. Subway sandwiches, pizza, and beverages also serve as an appeal. Interestingly, these campaigns really pay off, at least for companies. As for students, the vast majority favor the regulation of deceptive credit marketing on college campuses. And it's worth saying that 14 states have already passed certain laws that ban or restrict credit advertising campaigns on campuses. But there are still many colleges that allow credit campaigns.

While student advocates are highly concerned about deceptive credit practices, reps of the American Bankers Association oppose this legislation. The Senior Vice President of ABA declared that the vast majority of college students fulfill their obligations when it comes to credit cards. All the more so, the cases are not rare when students handle plastics even more carefully compared with adults.

Meantime, the survey shows that one-fourth of students made a late credit payment, and fifteen percent had to pay over the limit fee for exceeding their credit limits. It's worth mentioning that credit companies charge excessive credit penalties. Default rates may be as high as 30 percent, plus heavy credit fees.

It's also worth saying that the number of young adults carrying student credit cards has declined to 35% over the recent years. Meantime, the number of students with debit cards has risen to 60% this year. Probably, that's the reason why the amount of student credit card debt has decreased. Anyway, student credit cards remain a very effective credit building tool, and they're still very popular among young adults.