Why Credit Card Companies Target College Students

As a college student you will probably quickly discover that credit card companies are extremely eager to hand out credit cards to students. Many stipulations and credit requirements such as proof of income, good credit score, good credit history are all bypassed when it comes to approving a college student for a credit card. This is not surprising because the credit card companies know something that you do not. They are making a smart and clever decision by targeting college students to sign up for credit cards even though they may seemingly be a bad credit risk.

Credit companies know that college students are better credit risk than most consumers.

Credit card companies find it easy to rope in college students. They offer freebies like free T-shirts etc. just to get the student interested. Many students sign-on just to get their hands on the freebies thinking that they will never ever use the card anyway. But this seldom happens.

Things have changes in the recent past though.

New credit card regulations of the Credit CARD Act, 2009 prohibit any company or bank to offer freebies like t-shirts, free pizzas etc. within 1000 ft of a college campus as a reward for signing up for a credit card. However, you may still find these companies at the nearest hang out joint.

Being in college means that the situation will arise when using the card will seem like an extremely good idea. It may be a birthday celebration bash or a road trip. Some students even used a credit card to pay for college tuition. Where and when you use it does not really matter. The point is that the credit card companies know this even before you do. They know that once they make you sign up, you are going to use the credit card.

2 key reasons why credit card companies like to sign up college students for their credit cards.

  • A report by Sallie Mae reveals that an average student is likely to have about four credit cards with a balance of $3000 in total. Another report suggests that one out of four students will have a debt of $5,000 when he leaves college. You do not want to be in either of these situations. So it is a fact that college students use credit cards and pay a lot as interest.
  • Not only to the credit card companies realize that catching a consumer young may result in many many years of brand loyalty with thousands of dollars paid in terms of interest and financial charges, but also the fact that in most of the cases the parents will bail out their children in the situation of an unpaid credit debt.

A credit card is an important tool while you’re in college. Not only is it a resource for urgent needs an important expenditure, it is also an excellent way to build up your credit history and your credit score even before you are out of college. Having a good credit score when you leave college will make things a lot easier for you. You will find that your credit report is of a great deal of importance when it comes to finding a house on rent, buying your first car, applying for a loan or even getting your first job. Choose your credit card wisely. Shop around and be clear in your mind as to what you want your credit card for. Desired features in a credit card or low interest rate and finance charges, interest-free installment payment ability, no annual fee etc.

When you first set out to go to college you should be wary of the credit card offers that are thrown in your face in and around the campus. If you feel that you need a credit card in college it is better to take one beforehand from the bank that you have an account with or your parents’ bank. Many laws in states like California, Texas, Oklahoma and New York have rules that restrict credit card companies from marketing themselves on campus. If you are in a state where these laws do not exist and you are being exposed to these kind of offers then you need to exercise caution.

Find your own credit card that provides the services that you require.