College students learn a lot of lessons while at school. Some lessons are from classrooms and books, and others are from life experiences. One of those life experiences is the danger of poor debt management when using a credit card. College students who apply for and receive credit cards but exhibit poor debt management skills leave school not only with credit card and maybe school loan debt, but also a poor credit record, which can make starting out on their own difficult.
Incentives To Apply
College students are frequently lured in by credit card marketing ploys geared toward college students. These ploys include giving away items in exchange for applying for a credit card or using it the first time. Some of these items include iPods, gift cards, video game systems, gas cards, free airline tickets and food.
Appeal To Credit Card Companies
College students are commonly targeted by credit card companies because the company sees the potential in the students as long-term customers. According to a 2006 article in "USA Today" titled "Easy Credit Can mean Long-Term Hardship For College Students," credit card companies expect college students to make more money in their lifetime than students who do not go to college. The credit card companies also anticipate college students being loyal to the credit card company that gave them their first credit card.
Building Debt
According to an article on Channel 13 in Rochester, New York's website in April 2009, the average student owed $3,200 when graduating from college or leaving school. For students who have student loans, this increases the amount of debt a student has before getting that first job out of college.
Credit Issues
When college students leave school, the debt is not the only thing they bring with them as a result of their credit cards. If the student fails to make payments on time while in college, the student can ruin her credit. This can have an effect on the student's ability to purchase items such as a vehicle when she leaves school, as well as purchasing a home or renting an apartment.
Introductory Rates
College students can sometimes be lured into applying for a credit card based on a low introductory rate. The college student must be careful to read the fine print on these introductory rates, though. He must not only consider the time period for the introductory rate, but also any penalties for late payments. Some credit card companies will cancel the introductory rate if a payment is made late by just one day during that introductory period. This can result in a substantial increase; for example, introductory rates could be as low as 0 to 2 percent during the introductory period and then jump up to a rate as high as 28 percent with just one late payment.
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