Helping Students


Increase in Credit Card Offerings to Students

December 22, 2007 | Category: Credit Cards 
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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

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