I remember my freshman year of college walking by a booth with t-shirts, operated by a couple of people roughly my age shouting “free t-shirt” every few minutes. Out of curiosity, I joined a big group of people and picked up a clipboard with what I thought was going to be some sort of college sponsored contest or survey.
Instead, it was a credit card application. Flipping the application over, I found it had a “special” college student offer of 22% A.P.R. Now at the time I had the financial sense of a cylinder block, but even I knew that was really high based on conversations I’d overheard when adults in my family talk about their credit cards.
“Not-so-free t-shirt,” I said out loud, pointing the fine-print interest rate out to a girl next to me.
She nodded and pointed to her application, letting me know she was going to be one person not caught by the credit card company’s marketing ploy. Even to this day I wonder if “Ms. Haha Gotashirt” ever got her $1500 line of credit processed. Since applications are only spot-checked, it’s scary that it may have actually gone through!
There were however a lot of people standing in line that day, and if you just played with the numbers you’d find the credit card spending of one or two of them would have paid for all the t-shirts that day, plus the two minimum wage employees.
I would say the majority of students in that line told themselves they were just going to get the t-shirt and never use the card. A week or so later the card came in, and suddenly there was something going on that required money. That’s not too hard to find in college, but this situation also happens to students who get a card with the intention of only using it for emergencies. Some of us didn’t go out and overspend all at once, but the credit card balances still end up rising a little at a time when cash was running short.
Fast forward to senior year, where most people are graduating with not only student loans but high amounts of credit card debt. A few will have parents that will bail them out (which is really what the credit card companies are betting on) and the rest will have to struggle with the mistakes made from ignorance.
So what’s the solution to all of this? Most likely, credit card companies aren’t going to stop marketing to people in their late teens and early 20s any time soon. If enough people educate themselves however, we’ll make our age group a less appealing target for them.
The two books that personally have helped me the most with money are “Rich Dad, Poor Dad” by Robert Kiyosaki and “The Total Money Makeover” by Dave Ramsey. I believe getting a financial education is just as important as anything you do formally in college and will do a lot to help this issue at its core.