by Monty Cliff

Created on: October 27, 2008

What side you take on this debate depends on what's more important to you; good business or integrity. College students are the best possible market for credit card companies, they're broke, eager to live a life filled with commodeities and they have yet to learn how to stand up for themselves agaisnt a pushy salesmen. But is it really an ethical thing to do?

Let's start off with the draw of credit cards. Credit cards offer us the instant gratification of getting what we want when we want it. And there is no one better to market that idea to than a 18-20something year old desperately trying to stand on their own financial ground. Need a $500 for books? Just take them to the counter and swipe. Want that new home theater system? Swipe the card and enjoy now, and pay later! It's a common mistake that college students make, they mistake freedom for irresponsibility with no consequences. So the idea of buying whatever you want, whenever you want it isn't an idea that credit card companies have to sell to college students, it's an idea they've already bought and all they need now is the merchandise.

But, what really gets college students is they don't understand how credit cards actually work. They have the idea that it is their failsafe, a way to buy whatever they need to buy. But they're wrong. Whenever you use a credit card, the credit card company actually pays for what you are buying. So, in effect, your bill isn't paying for your merchandise, because that's already done, your bill is paying back the card company for buying your stuff. A more appropriate way to think of a credit card is a card that issues you loans from the credit card company, all you have to do is pay those loans back. With interest.

Credit card companies get their money from the interest and penalties they charge the card holder for being late with a payment or not paying the full amount. A card holder that pays their balance on time, in full, is useless to the company. Why? because such a customer only allows the company to break even, no profit can be gained from such customers. But college students, who haven't learned that with freedom comes responsibility, see credit cards as an escape from the "Starving College Student" routine. But since college students don't have the money to pay back what they've charged, it leads to fees and penalties that make up credit card companies profits. Those fees and penalties represent money that comes entirely from the card holder, not the company, so whatever money is collected counts as a 100% profit. It's a sweet deal for the company, but while the company gets richer the card holder has to deal with bad credit and deeper debt.

I'm not going to lie, as a college student myself, credit cards have a good draw to them. It would be nice to eat, and fill up my car with gas when I personally can't afford it. But, after watching members of my family spend years dragging themselves out of credit card debt, I think I'll pass. As for the rest of it, if you're a parent supporting credit card marketing to college students, either teach your child how use that piece of plastic or be prepared to help out with the debt they undoubtedly will find themselves in.

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