Selling Students

Credit

What’s Next? Life After High School

60%

40%Work force

School: 2-year, 4-year,

or vocational 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