Student credit cards are the stepping stone of one's entry
into adulthood. Banks have recognized that they can help
build a foundation of responsibility by offering credit
cards to students. It also builds a lifelong trust between
students and the banks that offer these cards. Most of the
students who apply and receive credit cards from banks, go
on to become business professionals. Financial
institutions realize that is extremely important to develop
relationships with these future business leaders of
tomorrow.
Statistics clearly show that after graduation, students
tend to stay with their respective credit card companies
for very long periods of time. This is a crucial fact that
financial institutions have learned through years of
research. It is because of this, that credit card
companies have continued to increasingly develop and target
ad campaigns directed at students. It has become easier
than ever, for a student to apply and be accepted for a
student card.
Many industry experts feel that it is extremely dangerous
for financial institutions to offer credit cards to
students. Some say, that it is due to the fact, that the
credit limits are often based upon what the credit card
company feels the student will earn in the future and not
what they currently earn. Most students, while in school,
have little to no income, and have almost no credit history
whatsoever.
Students who apply for credit cards also tend to spend
their money on items that are not long term, such as
entertainment, food, and living expenses. Studies have
shown, that many students disregard the credit card debt
after graduation. This is primarily because the majority
of their credit balance was spent on intangible items.
This leads to a "why should I continue to pay for something
that I no longer have" justification. Given this fact,
many financial institutions have seen a higher number of
defaults on their student credit cards. Most students
don't default on their credit cards, however, the students
that do default, have placed a tremendous financial burden
onto the banks who carry the debt.
The real question shouldn't be: "are student credit cards
dangerous for the economy?", but: " is the economy
dangerous for students?" Why would a student even need a
credit card? The simple answer: school tuition and living
expenses. Schools have become outrageously expensive these
days. College costs have increased faster than inflation
for the past eleven years, according to the College Board,
which is a non-profit organization of schools,
universities, and colleges. Many students are asking why
they have to go into debt to earn an education?
So here's the question again: are student credit cards
dangerous to the economy? It all depends on how you look
at it. On one hand, it teaches self reliance, builds
credit, and allows students to enter into the financial
marketplace. On the other hand, the student credit card
can cause bad spending habits, create a bad borrowing
history, and cause students to become slaves to the debt.
So whether or not student credit cards are dangerous to the
economy, is really dependent on the individual student. It
all comes down to the character of the borrower. Student
credit cards, if used prudently, can build a bridge to
financial success, but if used unwisely, they can become a
burden to the economy and a stumbling block to a student's
chance at a responsible financial future.
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Bryan Pringle, Ph.D., has written many articles on the
credit industry, and is the webmaster of websites offering
news and information regarding credit cards. For more
information, please visit:
http://www.apply-forcreditcards-online.com
