Restrictions on Marketing Practices Regarding Student Credit Cards
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by: barrywaters
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Word Count: 475
Solicitations for student credit cards on college campuses are as common as fraternity sweatshirts. Representatives trying to convince kids to apply for student credit cards have become more prevalent over the years. Students are an easy target. Most of them are discovering a new sense of autonomy, as they take charge of their daily lives. For some, student credit cards offer the promise of instant gratification and new spending power. Many state legislatures and college administrators, however, feel that credit card companies are taking advantage of students at a time when many are very naive about financial obligations and do not yet understand the long term consequences of debt. For example, solicitations for student credit cards on the grounds at Rutgers are no longer allowed. Some universities are considering less drastic measures to reign in behaviors that push student credit cards, as state lawmakers discuss ways to help them do that. California, Oklahoma, New York and Texas are among the states that have passed laws that rein in marketing and solicitations of student credit cards, and Illinois is currently debating similar restrictions. The first week of February, New Jersey joined the list of states trying to crack down on predatory solicitations of student credit cards on campuses. A bill was introduced that requires companies to provide educational programs for students prior to any student credit cards being issued. The programs must provide an understanding of how debt affects credit, how interest on balances is calculated, the different interest rate terms and the consequences of not paying balances in full each month. The bill also limits sales gimmicks, so students are not wooed into applying for credit cards just to get the free pizza or shirt. Lawmakers believe restrictions in the bill will help protect students from making poor financial decisions that could have long term consequences. Credit cards can be a useful financial tool, if used appropriately, and legislators want to give students a chance to make sound decisions about those cards.
The state of the current economy has left many consumers reevaluating their spending habits and credit behaviors. The free wheeling days of easy credit and a housing market that kept going up lured many into thinking they would not have to be responsible for their own credit habits. The financial events of the past year has many now rethinking their habits and trying to pay off accumulated debt on credit cards and elsewhere. The efforts of many state legislatures and university administrations to tame the marketing of student credit cards aim to prevent students from falling into the trap that so many consumers have fallen into. If students learn to make sound decisions regarding their finances and spending habits in college, they will carry that with them into adulthood.
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For the real scoop on credit card application, visit getsmart.com/credit-cards.
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