Student Credit Card: University Profit or Students' Wellbeing?

A growing percentage of American consumers apply for credit for their first  time at college campus. There's no need to prove that students are an easy game for the banks and companies creating special credit card programs and having them promoted by the colleges. Consumer groups and some separate student communities realize the real danger of debt most students are likely to get into upon graduation. More than that, they insist that all this propaganda is a crafty plan of banks and colleges to earn profit. They have a solid ground to base their arguments, though.

A couple of years ago a relationship between student credit card lenders and universities was uncovered where the lender agreed to pay the university a good sum if it encouraged card spending and carrying balances.

This is utterly outrageous, given that the fine print is no less complicated and confusing for young people with hardly any financial education behind. With all the benefits of owning a student credit card -credit history establishment, purchase power and payment convenience - the risk is still not justified.

The percentage of graduates with good score enough to find a well-paid job, get a low APR credit card and take out a mortgage pales against the huge amount of revenues made at the inexperienced and hasty card use. Bad debt incurred at college is sounding alarm bells especially in the environment of weak economy and increasing unemployment.

But life is not so easy and student credit cards cannot be just eliminated. There are evident positives to all the participants - banks, colleges and students themselves. Colleges get the valuable source for scholarship and other college programs at the time of public funding cut. Banks see their relationships with colleges as a great marketing opportunity, hoping to build up a loyal customer base for future business.

All these factors they keep lawmakers from closing up the programs. A different pair of shoes is who suffers most - you guess. Even though student cards have more restrictive terms, limited credit lines and reasonable interest rates, they nevertheless end up in debt.

It stems from the misunderstanding or ignorance of the basic credit rules, such as what is APR and how it accumulates, how you should pay bills to avoid carrying balances and more. Most students stay away from learning about such things while rushing to make use of each bank card application offered to them.

Bank of America representatives say they are taking every step towards fairer lending as they realize students are their future customers. Together with the alumni associations at a number of colleges, Bank of America arranges seminars for students to understand the fine print and general rules of card use.

This has not yet brought any evident improvements into the practice of student lending. As put by Carolyn Maloney, a N-Y Democrat, there should be a law prohibiting card promotion at campus. It does not mean that credit cards for students will be harder to find and get. It only suggests prohibition of sharing students' personal information with banks that use it for their marketing campaign.

If a college student wants to get credit, he/she will perhaps be safer if they apply online.  That's where they can compare all credit card deals and choose the one that has better terms. Before that, though, they should learn credit card basics to know which features determine the price of the card and its safety.