Frontline is releasing a new report on the Banks, Credit and The American Consumer. Some of the top authorities on consumer spending agreeded to be a part of this.  Watch it on PBS or Online November 24, 2009 at 9pm.  They will be investigating the history of credit card industry and proposals for reform.

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via DemocracyNow.org – “The Card Game“

Sen. John Nutting, D-Leeds, has heard many times. To prevent such problems in the future, Nutting has introduced a bill that would require anyone younger than 21 to get permission from a parent or guardian to get a credit card. Without their parents’ knowledge, students sign up for credit cards through the many offers made at colleges, Nutting said. Unschooled in financial matters, the students can quickly rack up sizable debts.

Read more about bill to limit college credit cards

Everyone knows that smoking is cool. Oh, especially when actors do it on TV. It just looks so sexy, so sophisticated—it’s hard to imagine these suave characters hacking up blood as their lungs cave in.

Sure enough, though, long-term smoking kills. And the best way to get addicted is by starting young.

It kind of reminds me of credit card companies—in particular, the ones that target college students. They, too, are hawking a sexy product; apart from the mysterious charm of an afternoon cigarette, I can’t think of anything more glamorous than thousands of dollars of credit for nothing.

And credit card companies are well aware of this. They know how irresistible free money can be. That’s why, in recent years, they’ve done quite well reeling in college kids with offers of credit that would make anyone’s jaw drop.

Instant approval, 0% APR, $3,000 credit limit—it’s amazing. And it’s a little bit strange, too. After all, college kids are among the least likely candidates for credit, yet they’re one of the only groups receiving such incredible offers. While members of nearly every other age group have to jump through hoops to get this kind of approval, college kids get carte blanche.

That’s right: college kids. You and all your friends. The ones who have absolutely no credit history, who’ve probably never paid a bill, who can hardly prepare a plate of spaghetti— you’re the ones getting instant approval? What’s that all about?

The answer is simple, actually: brand loyalty. According to Rockhurst University’s College Chalkboard , the trend of targeting youth began in the latter part of the 1980’s, when Mastercard found out that three quarters of student credit card holders would still have the same card 15 years later.

Other companies quickly jumped on board, bringing us up to now when the latest Nellie Mae credit card study shows that a whopping 76% of undergraduates owned credit cards in 2004.

Much in the same way that tobacco companies target the young, credit card companies are bent on fostering a relationship with kids. And considering that the estimated spending power of this group is at about $100 billion (see College Chalkboard ), it doesn’t hurt credit card companies to devote a little more attention to the students.

Written by:
William Sherman

There’s something special about getting mail, tearing open the envelope and pulling out the letter—you just can’t help but get excited.

Credit card companies can’t help it either. They send out letters all the time. Every six weeks, in fact, the average college student gets five credit card offers in the mail.

But this is a modern problem. If you went to school in the 1970’s, owning a credit card would be like contracting HIV—it just didn’t happen.

In the late 1980’s, however, the market for middle aged and in-debt credit card users started to make the sound of a straw sucking on melted ice. The credit card companies, however, were still feeling thirsty.

And they couldn’t help but notice that students’ spending power was estimated at $100 billion. So they applied an aggressive direct marketing strategy to college students, giving credit to a demographic typically inexperienced in managing personal finances.

In 1998, University of Oklahoma junior Sean Moyer was found dead , hanging in his bedroom closet. With $10,000 in debt, 12 credit cards and a part time job wrapping gifts, he must have felt suicide was the only escape.

Still, the direct mail keeps pouring in to college campuses across the nation, and, according to Nellie Mae, students respond to direct mail more than any other type of credit card solicitation.

Moreover, a forthcoming study in Service Marketing Quarterly shows that students have a 15% acceptance rate of direct mail credit card offers. Compared to the national average of .4%, this figure is astounding.

What’s also astounding is the amount of debt that students carry. Nellie Mae reports that the average college student is $2,169 in the hole. Freshmen have an average credit card debt of $1,585 while students in their final year have amassed $2,864 on average.

If you read the numbers right, though, you’ll find that this is actually good news: the average student credit card debt is at an all time low since 1998.

Interestingly, while credit card companies are also setting their sights on teens and non-enrolled college-age kids , it appears that students are still the best bet for credit card companies. While they are easily accessed by mail and on-campus promotional events, their parents are much more likely to bail them out on out-of-control debt than the parents of kids who don’t go to school. Credit card companies, after all, will make sure that they get their money back.

Written by:
William Sherman