MasterCard hooked LSA freshman Colt Rosensweig when she was 15 years old.
“I was sucked into the card because of a Detroit Tigers blanket,” she said. “I wasn’t actually planning on using it, I just wanted the blanket.”
Since then, Rosensweig has lost the blanket she received when she signed up for a MasterCard and the Tigers have lost hundreds of games, but she still uses the credit card.
Most agree that credit card companies market especially aggressively to college students and youths, said Paul Richard, executive director of the Institute of Consumer Education. They often set up booths on campuses, design advertising to appeal to the college demographic and distribute applications at the bottom of bags in university bookstores.
But experts disagree on why credit card companies target young people.
Aggressive marketing on campus is primarily a result of students’ above-average credit histories, said Robert Manning, a credit card industry expert and author of a study on college student credit card use.
“The number one factor is that college kids are less likely to be in debt when they first sign up,” said Manning, a professor at the Rochester Institute of Technology.
The reason that students have less debt is not a superior sense of responsibility, Manning said. Students often pass on bills to their parents or use student loans to pay off debt, resulting in a false sense of reliability.
Credit card companies attempt to hook young customers while their credit is still good, then drive them further and further into debt, Manning said. Once users’ credit histories are damaged by missed or late payments, they are less able to switch credit card companies, he said.
Poor credit scores can affect students’ ability to buy a house, get insurance and even land their dream job, experts agree.
Richard said he disagrees that the companies’ motives stem from finding customers without debt.
“Credit card people market to college students because they spend a lot,” Richard said. “The majority of them overspend.”
Richard argues that college students have roughly the same credit histories as the rest of the population and no better.
“Some college students have good credit histories, but for the most part, they have no or poor histories,” Richard said. “When these marketers are telling you that you have good credit and that’s why they’re going after you, that’s bull crap.”
Seven percent of students don’t pay back their minimum balances at the end of each month, about the same as the general population’s rate, according to the Institute of Consumer Education.
Catherine Pulley, spokeswoman for the American Bankers Association education foundation, said banks and credit card companies do not market more aggressively to college students than other Americans.
“College students are no different than other consumers,” she said. “In the heavy competition of the credit card industry, all consumers are heavily marketed to.”
The Institute of Consumer Education educates college students and other consumers about the dangers of credit card debt. They pass out “credit card condoms” and warning labels. The condoms are sleeves that slide over cards with messages such as “If You can Eat It, Drink it, Or Wear It, It is NOT an EMERGENCY” to make consumers think before they spend. The warning labels have messages such as “Can I Afford It?” and “Warning: Overuse is Dangerous.”
“This is the generation where credit cards are viewed as yuppie food stamps where you don’t have responsibility.”