Writer and financial manager Debbie Dragon said that a survey conducted by research marketing firm Braking Credits found that 50 percent of college students exposed to credit card “kiosks” inside their campuses sign up for new credit card accounts. Reasons include the low initial available credit card limit at 500 to 1,000 dollars and the very easy access to the maximum credit limit as well. As they avail themselves of credit cards in this set-up, they also get entitled to free shirts and pizzas as part of the marketing strategies of the credit card companies.
Dragon also writes that these students who sign up for new credit card accounts have in mind the thought of only paying the minimum 20 dollars per month.
What these college students do not know, according to Dragon, is that the failure to meet the minimum payment requirement on the deadline, even for a single month, may lead to substantial debt increases for long periods. For example, Dragon relates that the 500 dollar credit limit any new account owner is entitled to can be translated into debts that double or triple monthly once the cardholder fails to pay off the required amount on the deadline. What`s more, Dragon relates that the interest rates can also keep piling up for every month payment is late. Add to this the poor financial management of the unstable and vulnerable market of those who are 21 and below, Dragon believes that the college-students-turned-credit-card-owners are more exposed to harm.
Dragon says that college students will start incurring debts at a stage of their lives without any financial training or a sense of responsible financial management from their parents. College credit cards, Dragon adds, are the first opportunities for financial exploration by college students given the environment they are in.
Dragon says that because the students may be away from their parents a certain degree of independence is expected of them. They can almost always find reasons why they should open their own credit card accounts.
What these students are missing being the implications, Dragon reiterates. She mentions that in the future, because of a mistake in decision-making to apply for credit cards and not able to pay debts properly, the same students may no longer be qualified for mortgages and car loans.