Credit Cards and College Students: Education is Better than Banning
Sharon L. Secor
October 12, 2007
Recent news reports describe a national push by consumer advocacy groups, college administrators, and student organizations to limit or ban the marketing of credit cards to college students. While some schools are instituting more courses geared towards personal finance management, the primary means of addressing the matter of college students making poor use of credit cards appears to be focused on restricting access. This approach is wrong, and on a variety of levels.
Educating About Credit Cards and Personal Finance Better Than Banning
According to information published by The Motley Fool, the combined consumer debt total is 1.7 trillion – yes, trillion with a t – dollars and in 2001, Americans paid $50 billion worth of finance charges. The Federal Reserve offers further data, reporting that 46.2% of all households carry a credit card balance, a percentage that has risen from 44.4% in 2001. These balances are higher than in the past, with a mean balance today of $5,100, compared to $4,400 in 2001, and a median balance of $2,200, up from a 2001 median balance of $2,000. The news is full of tales of foreclosure woe and personal bankruptcy filing numbers remain high, even with the changes in the law aimed at tightening regulations and curbing abuse. Personal savings rates are ridiculously low.
Clearly, with so many adults struggling to manage credit card debt and other personal finance matters, there is a need for people to be a bit more financially educated. Rather than banning promotions and other college student credit card marketing ploys, it would make much more sense to teach real money management skills, the practical sorts of skills, such as budgeting, balancing a checkbook, understanding interest and other credit and loan terms and conditions, and the value of saving. Banning doesn’t teach anything at all, nor does it do much to promote maturity or character.
Banning Encourages Immaturity And Government Dependence
If college students are incapable of resisting slick credit card marketing, are unable to figure out the cost of credit and the implications of taking on credit card debt, then that is a very poor reflection on the quality of education that they received before they ever even entered college. After all, college students are typically 18 years and older. That means that, legally, they can vote, serve in the military, where they make life and death decisions, and make any number of other life-altering choices for themselves. With all the money poured into the public school systems, there is no excuse for them to be so poorly prepared for adulthood.
Turning to the government and insisting that it protect these poor, critical thinking skills challenged people from the big bad businessmen surely doesn’t go far in encouraging the development of personal responsibility. The idea that their credit card debt is because they were victimized by slick advertising and predatory lenders, rather than their own lack of money management skill and impulse control, certainly doesn’t help develop the qualities necessary for success, not for financial success or for personal success.
The bottom-line choice of whether or not to apply for a credit card and how to use it once it is obtained is an individual one. No matter how slick the marketing is or how great the promotional giveaways are, nobody is forced to take a credit card and use it to create debt.
Banning marketing is not the answer, because it only serves to remove the opportunity to choose, to make mistakes, and to grow, while fostering the idea that the individual simply isn’t capable or smart enough to make what in the end are pretty simple personal decisions, thus the government needs to do it for him. With the government always there to regulate, nobody needs to bother to learn self-discipline and control, a wonderful excuse for the government to continue increasing the degree to which they regulate the life of the individual.
While it is undeniable that, like many adults, college students can run into financial difficulties with credit cards, banning or restricting credit card marketing simply doesn’t serve to address the real problem -- the root cause of the accumulation of credit card debt that some students experience. College students would be far better served by being prepared to manage their own finances and lives, without having rely on the government to coddle and protect them to such a degree that they never really have to act like independent, strong adults in control of their lives and destinies.
Educating About Credit Cards and Personal Finance Better Than Banning
According to information published by The Motley Fool, the combined consumer debt total is 1.7 trillion – yes, trillion with a t – dollars and in 2001, Americans paid $50 billion worth of finance charges. The Federal Reserve offers further data, reporting that 46.2% of all households carry a credit card balance, a percentage that has risen from 44.4% in 2001. These balances are higher than in the past, with a mean balance today of $5,100, compared to $4,400 in 2001, and a median balance of $2,200, up from a 2001 median balance of $2,000. The news is full of tales of foreclosure woe and personal bankruptcy filing numbers remain high, even with the changes in the law aimed at tightening regulations and curbing abuse. Personal savings rates are ridiculously low.
Clearly, with so many adults struggling to manage credit card debt and other personal finance matters, there is a need for people to be a bit more financially educated. Rather than banning promotions and other college student credit card marketing ploys, it would make much more sense to teach real money management skills, the practical sorts of skills, such as budgeting, balancing a checkbook, understanding interest and other credit and loan terms and conditions, and the value of saving. Banning doesn’t teach anything at all, nor does it do much to promote maturity or character.
Banning Encourages Immaturity And Government Dependence
If college students are incapable of resisting slick credit card marketing, are unable to figure out the cost of credit and the implications of taking on credit card debt, then that is a very poor reflection on the quality of education that they received before they ever even entered college. After all, college students are typically 18 years and older. That means that, legally, they can vote, serve in the military, where they make life and death decisions, and make any number of other life-altering choices for themselves. With all the money poured into the public school systems, there is no excuse for them to be so poorly prepared for adulthood.
Turning to the government and insisting that it protect these poor, critical thinking skills challenged people from the big bad businessmen surely doesn’t go far in encouraging the development of personal responsibility. The idea that their credit card debt is because they were victimized by slick advertising and predatory lenders, rather than their own lack of money management skill and impulse control, certainly doesn’t help develop the qualities necessary for success, not for financial success or for personal success.
The bottom-line choice of whether or not to apply for a credit card and how to use it once it is obtained is an individual one. No matter how slick the marketing is or how great the promotional giveaways are, nobody is forced to take a credit card and use it to create debt.
Banning marketing is not the answer, because it only serves to remove the opportunity to choose, to make mistakes, and to grow, while fostering the idea that the individual simply isn’t capable or smart enough to make what in the end are pretty simple personal decisions, thus the government needs to do it for him. With the government always there to regulate, nobody needs to bother to learn self-discipline and control, a wonderful excuse for the government to continue increasing the degree to which they regulate the life of the individual.
While it is undeniable that, like many adults, college students can run into financial difficulties with credit cards, banning or restricting credit card marketing simply doesn’t serve to address the real problem -- the root cause of the accumulation of credit card debt that some students experience. College students would be far better served by being prepared to manage their own finances and lives, without having rely on the government to coddle and protect them to such a degree that they never really have to act like independent, strong adults in control of their lives and destinies.
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