More Money, Please: The Financial Secrets You Never Learned in School by Scott Gamm

Author:Scott Gamm
Language: eng
Format: mobi
Tags: self help, finance
ISBN: 9781101615492
Publisher: Plume
Published: 2013-04-29T04:00:00+00:00

Why Credit Card Companies

Don’t Care about Young People

In 2009 credit card companies spent over $83 million to market and promote student credit cards, according to the Federal Reserve. As a result of those marketing efforts, credit card issuers gained an additional fifty-three thousand student credit card accounts.6 In 2010 the amount charged by students dropped 13 percent, to $73,261,906 (a decrease of $11,200,859). But just because students charged less doesn’t mean the credit card companies weren’t still roping in tons of young customers.

Credit card companies are notorious for marketing specifically toward students. While the aforementioned Credit CARD Act banned companies from giving students incentives if they sign up for a card and prohibited companies from setting up marketing tents within a thousand feet of campus, that doesn’t mean they’re invisible. I saw a credit card company giving out iced tea and popcorn outside a bank located about one block from a dorm at school. You didn’t need to sign up for a credit card to receive the goodies (thus following the CARD Act), but it was still trying to lure students into the branch.

Bottom line? Stay away from marketing tents on or near college campuses. Credit cards offered at these tents typically come with hidden fees and high interest rates. Finding the best credit card requires some research and strategy, as mentioned at the beginning of the chapter.

How the Credit CARD Act Has Failed to Protect Students

In my opinion, the measures put forth by the Credit CARD Act are not strict enough. The intentions behind the plan are good, but there are plenty of loopholes that allows banks to prey on students. Just take the case of the bank setting up its tent by the NYU dorm. It wasn’t breaking the rules, but it was certainly trying to sway students.

The Credit CARD Act also prohibits credit card companies from mailing preapproved credit card offers to anyone under twenty-one, as we mentioned earlier in this chapter. They are still permitted to send traditional credit card offers though, and they do. According to Jim Hawkins, professor at the University of Houston, 76 percent of students said they had received a credit card offer in the mail since the start of 2010.7 I know I’m just one guy in a sea of credit card users, but in my humble opinion the legislation should have banned all types of credit card offers from being sent to those under the age of twenty-one.

And credit card companies are always looking for new ways to exploit their customer base. A March 2012 article on WSJ.com showed how the major credit card companies are targeting young people on social media outlets like Twitter, Facebook, and Foursquare.8 They’ll post a barrage of tweets and Facebook status updates or offer game-based incentives in the hopes that people will “like” a credit card company’s Facebook page. The article mentions how American Express is using this tactic the most, though a spokeswoman for AmEx claims the social media campaign isn’t targeted to “undergrads or anyone under the age of 21.

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