Student Credit Cards in Trouble

[TwixVoy]

According to this article banks are getting rid of their student credit card offers. Gosh, who would have thought extensively targeting and handing out $5000 credit lines like candy to a largely unemployed, financially unstable, young, and beer/pizza loving demographic with no established credit history could ever cause a problem?

http://www.studentplatinum.com/student-credit-card-blog/2009/03/11/student-credit-cards-in-trouble/

[sandnsea]

1. Parents begged for this 20 years ago

Donahue had shows on the stupidity of student credit cards for chrissake.

Damn those irresponsible parents who let their kids do whatever they want. :sarcasm:

[Uben]

2. I knew we were in trouble when.....

...I first heard of this practice. Who in their right mind would extend credit to someone who doesn't have a job and no credit history? Answer: banks Why? Cuz it's our money, not theirs.

[Warpy]

5. They didn't even send the offers back in the 70s when it started

They sent the actual cards out to every student registered at a school. The cards had a modest limit of a few hundred dollars back then, but we know what happened when a student reached the limit: it was raised.

It's been a "go into debt for the rest of your life" scam since day 1.

[Karenina]

3. No one could have EVER imagined!

MAN THE BATTLE STATIONS!!! :hide:

I was gonna post this OP in the WSJ by Meredith Whitney, "Credit Cards Are the Next Crunch" but it seems the page has been pulled...

[ProgrezivIndie]

8. but it seems the page has been pulled...

I just loaded your aforementioned WSJ article:
http://online.wsj.com/article/SB123664459331878113.html

[no_hypocrisy]

4. I remember in the fall of 1975, my freshman year, seeing these offers and applications.

I was amidst a crowd of compatriots who never wrote a check and they were being offered credit. Never made sense to me.

[madaboutharry]

6. When I was a college student

in the early 80's, I was able to get a credit card. I had to bring in my report card and my parents had to sign an approval. The limit was $300.

Somewhere along the way, maybe 10 years later, credit cards were being offered to college students with $10,000 limits. It was just crazy.

[imdjh]

7. Nobody ever offered me a $5000 credit card in college

What they offered me was a $500 credit card with an outrageous interest rate.

I guess there are a couple of ways of looking at it. You give the card, they spend the $500, pay it back $10 or $30 at a pop for a year until their parents find out and then pay off the balance which is now $650 with late charges. So the bank makes $270 on a $500 investment. Rockefeller would be proud, and Chase Bank is one of the biggest offenders.

The other way to look at it is getting in on the first position of a pyramid. You give a $5000 credit card to a college student, who will then pay you (now) 30% interest for a year for which you give college student a glowing credit report, and he suddenly discovers that paying 30% interest isn't too smart, at about the time he gets a real job and a new credit card. He pays you off with his new Jupiter Visa, and you made 30% on your money, Rockefeller would be proud.