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College and Credit Cards

Written by: Steven J. Weil, PhD, EA

Article Overview: When your child started preparing for college you probably discussed a multitude of issues that may arise. But have you educated your college aged children about their fiscal plan?

College and Credit Cards

College and Credit Cards

When your child started preparing for college you probably discussed a multitude of issues that may arise. But have you educated your college aged children about their fiscal plan?

College campuses are riddled with credit card companies offering free t-shirts and pizza to students in exchange for signing up for their credit card. Many students fall victim to these predatory practices each year and fall deep in to debt long before that first paycheck after graduation. You may wonder why a credit card company would see your non-working college student as a good risk --- search no farther than the person footing the tuition bill. Companies look at Mom and Dad as "income" and figure the well educated kids with earn higher salaries after graduation, starting life-long loyalty at an early age.

The new, Credit Card Accountability, Responsibility, and Disclosure (CARD) Act, passed May 22, 2009, was designed to protect college students from these predatory practices. This law will eliminate students with no income (other than money from their parents) to no longer be eligible to apply for a credit card without a co-signer (an adult over the age of 21). Without a co-signer credit card companies must restrict the credit issued to 20 percent the student's income.  Once a co-signer agrees to be jointly liable, income restrictions are removed. Keep in mind that by co-signing you are liable for the debt in full, rather than for half of the balance. The CARD law also prevents companies from promising free gifts that have long enticed students to sign up. Unfortunately, the law does not go into effect until February 22, 2010 and therefore you will need to prepare your student for even more aggressive marketing tactics in this 6 month interval.

With the average student credit card debt reaching $4,100 for graduating seniors, it is more important than ever to provide your child with the proper tools to maintain control of their finances. Discuss credit and how it works with your child and help them to select an appropriate card. Review the credit card offers with your child and compare interest rates, annual fees, grace periods, and penalties. Explain that if a balance is not paid in full each month that a significant amount of interest is due. Instilling this knowledge will allow your student to make more informed decisions when choosing a credit card. Most importantly you must be conscious of the message you send: how you treat money can have a big influence on your children.

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Article Tags: aggressive marketing, co signer, college campuses, credit card debt, credit cards, february 22, fiscal plan, free gifts, free t shirts, income restrictions, interval, marketing tactics, mom and dad, multitude, paycheck, predatory practices, preparing for college, proper tools, student credit card, tuition bill



Related Forum Posts
What is your age - Hi there, Life is not dull. It is amazing, how one thing can lead to an entire different subject. It began with the age question. Finally it referred to 'Credit Cards'. I was interested to know, the age groups involved in the forum. It indicates that most of the users are between 20 - 35 years old. I am sure there are some visitors who are in the older group. Let us have your vote. Kindest Regards, Beat "Unlock People's Potentials!"
Building credit - Credit is like reputations, I suppose. Takes a lifetime to build, and only a second to destroy.
Marketing and PR ideas related to a Credit Organization - Hello Everybody! I would be very grateful if you suggested some PR and Marketing ideas for a Credit Organization which target market is poor public who live in village and haven't any access to the internet. Thanx in advance
Re: Did you reach your goal this year? - Turns out there's 5 meeting locations for Toastmasters International in State College alone... only 30 minutes from my town. Most likely due to Penn State University, but surprising nonetheless that I have never heard of the organization before. I'll have to look more into it as it sounds like something I could benefit from.
Offer Credit instead - I'm not sure if ChrisH was referring to this but i'll state it more expicitly .. Charge upfront and offer a refund of double the value back in "Credit" towards your Product or Service you have for sale at the end of the event.


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