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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
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
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