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| No | 80% | 821 votes | Total: 1031 votes | |
| Yes | 20% | 210 votes |
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Add to FavoritesGiving credit cards to colleges students is one way that colleges and banks have scratched each others backs in recent years. But I do not feel it is in the best interest of the college, the bank and certainly not in the best interest of the student when credit card companies targeted them.
Giving easy credit to graduates without preparing them to use it wisely may be a great way for a college to get quick easy funding from banks. It might be an easy and quick way for a bank to sell a product in bulk that has potential to provide continual revenue of interest and penalty fees. It might make a college student feel real good to leave school with a $20,000 limit, just a swipe away. But I suggest it is not good for any of the above mentioned parties.
I discovered recently that the college I went to 20 years ago is now qualifying students for a $20,000 limit on a Visa Card. I was angry and felt a major concern about the wisdom in this act. I looked into the reasoning and it was simply that Visa contributes a large sum of money to the college for every account set up.
Visa wins because they automatically get numerous accounts with little effort and the likelihood of large interest payment returns in the future from those just learning about how credit works. The College wins because they get money from Visa for each card and it is a real easy fund raiser.
However, in this case, the students loose because they are being targeted for the causes of both the bank and the college. Many of students are not ready to handle such accessible credit. Most of them will end up paying high interest and penalties to the bank because of faults, failures and bad planning on their part.
To target students for easy money is not in the bank's best interest. But I think the colleges and banks could do good by targeting the collage age for the sake of teaching them wise and careful borrowing practices.
They could in turn reward students with cards that match their completion of classes on using credit and money management. The reward may be credit limits and interest rates that complement the student's proven credit use competency.
This would be good for all the parties involved.
Recently the United States saw banks pay for the apparent targeting of a group of willing borrowers. These borrowers were entry level home owners. The banks provided low interest arm loans that would carry higher risks then conventional loans.
The offering of these loans was the banks way of selling a product in bulk with the high potential for advantage to the bank. At the time it was seen as an advantage to the borrower. But that was really part of a sales gimmick.
The banks knew their borrowers were mostly inexperienced with credit. They also knew when the economy changed, they were in control of the interest rates and that their customers would bear the full weight of the impact.
This was the case until the borrowers was simply way in over their heads. They got in over their heads for the same reason that they bought into the easy low interest arm loans. It was a "Do what works best now and don't worry about the future" kind of decision.
The banks were thinking the same way and the future was rougher then either expected. Now people are loosing their homes and banks are closing because both the borrowers and the lenders were going after what was easiest at the time.
I see a big parallel in what has happened with the home loan industry and the credit card companies who are targeting students. It is easy but flawed, in that what could make a profit for the bank but could devastate a new graduate and even cause him bankruptcy.
This is not good for the bank because they are leading into another potential market crash in the sectors that were targeted.
This is not good for the students, the banks or the colleges whose purpose is supposed to be edifying and building into a students future and potential. It's supposed to be education first then profit. It would be best if it was the kind of education that promised profit for all parties involved.
Learn more about this author, Nathan Perkins.
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Yes
The credit card industry is really big business, to be this successful a credit card provider has to know their client base in order to be able to continue paying their overheads, and keep their workforce in employment.
As with any business, a large portion of that success is due to marketing, to devise the most apt features, advantages and benefits of their product, then pick a target clientele niche within the populous.
If a company were to target a section of the community which were identified through experience as a bad credit risk, would that company prosper or perish for having made such a decision as to welcome this category of client as a customer? Of course there can only be one answer to that question.
It would be more cost effective for a credit provider who attracts bad risk clients, to throw their money into the fire, that way they can at the very least benefit from the warmth that it gave off for a short time. You see a dollar in the hands of bad risk customers could lose a company not only that dollar, but also the costs involved in arranging the loan. A dollar in the fire costs a dollar, a dollar in the hands of someone who does not have the means, or intention to repay with interest has cost the provider more than the basic dollar before handing it over, even before making any arrangements to recover the debt. I would agree that my point here may appear at first flippant, nonetheless it is a matter of fact.
OK, so the case for a credit card provider attracting the right clientele has now been established.
I will now, at last, get to the main question of this debate.
Should credit card companies be targeting college students?
My answer to this question is obviously YES, but I do have a need to qualify this response further.
A credit card provider, and any business in fact, must seek the most reliable audience when marketing their product or service. By minimizing risk a company is able to offer a better and more cost effective service for their customer, this ensures continuance within business, and continued employment for their workforce.
It would appear obvious that the heading of this debate infers that the welcoming of students is a relatively safe risk, and that the decision has been made to target this audience is rooted in hard fact. College students are good credit risks statistics have proved that.
The fly in the ointment is, not all credit card providers show professional responsibility in selecting their client. If a provider is saying YES, YES, YES to a new applicant without going through a procedure of verification, then they should be shown the door promptly.
A good provider will ensure that all efforts have been made to establish the income and means of repayment from their individual client's perspective before entering into the agreement stage of the deal. A really good provider will sit with their prospective student client and devise with them, an effective budget.
So if you are a student, then congratulate yourself for belonging to a trustworthy section of society. Whether or not you wish to apply for a credit card.
For the parent of a student, it's not what we think of our children, it's what society thinks that is important. Statistics have shown that our student is a reliable youngster, well equipped for a successful union with good citizenship.
The moral of this article is, look at the question carefully, beyond any initial knee jerk' reaction, and you may well find yourself answering differently after a little research.
Learn more about this author, Keen Johns.
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