Selling Students Credit

What’s Next? Life After High School

Why Students Use Credit Cards An increase in college costs and a decrease in families’ liquid savings leads to a dependence on loans & credit cards. Students have a cognitive disconnect between the: –Reality of their current incomes vs. an affordable lifestyle

More Reasons Why Students Use Credit Cards Students want their parents’ lifestyle BUT don’t have the same financial resources. They depend on: –Financial Aid –Families –Part-time work –Credit Cards

Consumption and Credit Students don’t embrace “old school” financial values Consumption pressure and easy access to credit Increased social acceptance of debt Credit is a reward

Long-term Effects of Credit Graduate with: –Student loans –Credit card debt Affect credit score Harder to get: –Car loan or insurance –Apartment lease –Mortgage loan –Job

College Students’ Money Problems

Credit Card Use by Year

Credit Cards: The “Other” Drug Marketing of credit cards on campuses poses a greater threat than: –Alcohol –Drugs –Sexually transmitted diseases Students with high credit card debt are more likely to: –Earn poorer grades –Drop out of school –Suffer from depression –File for bankruptcy –Work more hours to pay bills No job? No income? No problem? If you are a student, you will be approved!

Credit Cards Offers Everywhere Bookstore Cafeteria Athletic Games Student Union Offer Free: –CDs –T-shirts –Water bottles

Mutual Benefit for College & Credit Card Company Access to unsaturated market –New students every year Credit card companies pay for: –Sponsorship of Events –Renting Tables –Affinity Cards –Student Clubs

Preparing for Managing Credit on Your Own Work income Allowance income –Live on a budget at home Food Entertainment Clothing

Managing Money in College Don't spend more money than you have Divide spending into: –Needs - Quarters for the laundry machine –Wants - $1,800 for a spring break trip to Florida Don't pay for the wants unless you can cover the needs

Managing Credit in College Get one credit card –Authorized user on parents’ card –Ask parent to cosign card –Secured Card Pay off the balance every month –Be aware of intro APRs vs. annual APRs. Don’t take cash advances Pay on time

Authorized User Primary cardholder, not authorized user, is legally responsible for the bill Your credit score and report will reflect the primary cardholder’s actions to your: –Benefit –Detriment

Co-signer Legally responsible to pay consumer debt if borrower defaults Your credit score and report will reflect the co-signers actions to your: –Benefit –Detriment

Secured Card Establish by depositing money into an account. Security for card if you don’t pay Make sure card issuer reports to credit bureaus All have annual fees, but not all have application or processing fees. Move to a credit card after one year