Credit Card Companies targeting College Students on Campuses - Essay Example

Credit Card Companies targeting College on Campuses Introduction Credit companies aggressively target college students with credit cards. According to a survey done by the US Public Interest Research Group, close to 76% of college students admit that credit cards were marketed to them within campuses (Uspirg.org). Moreover, almost a third of the 76% of current college students have been offered free gifts in order to sign up for the credit cards. Consequently, this has led to nearly a dozen of states restricting credit card marketing to students within campuses. Despite such moves, credit companies have persistently remained aggressive in signing up students within campuses for credit cards (Chu). This is despite the common view credit companies should not target college students on their campuses while marketing credit cards. Arguments against Marketing of Credit Cards to Students within Campuses Marketing of credit cards to students within campuses is against provisions of Federal Law on credit cards for college students. According to Chu, Federal Law on credit card categorically outlines that no bank or financial lending institution should give credit card to students and young adults of below 21 years who have no steady income or cosigner. This federal law prohibition provides a framework within which credit cards should be given that is, to persons above 21 years with a steady income. Unfortunately, most undergraduates after finishing school end up with enormous credit, which may eventually lead to bankruptcy and at the verge of financial crisis. Based on statistics obtained by the US Public Interest Research Group, graduating college students leave school with approximately $ 4,000 in debts (Uspirg.org). The US Public Interest Research Group goes ahead to establish that 56% of undergraduates obtain their first credit cards at the age of 18 years, which is a period when someone cannot make informed decisions (Uspirg.org). What’s more, by the time such a student is graduating, he or she will be in possession of four or more credit cards. Credit companies have been forced to enter into unethical business practices in order to entice and persuade college students to sign up for credit cards. College students are vulnerable to cheap offers such as T-shirts, pizzas, and other free gifts. Financial institution clearly understands the vulnerability of college students, which they unethically capitalize on to convince them to sign up for credit cards (Chu). Convincing and enticing of college students do not only include gifts but also dwell in short-lived offers such as lower interest rates and other deceptive marketing practices. For instance, in 2007 the state attorney charged Citi Bank and its marketing counterpart, Elite Marketing with application of deceptive marketing practices to entice students in order to sign up for credit cards. Taking advantage of consumer’s situation and vulnerability is an unethical practice that may only end up ruining and organization. The credit companies responsible for marketing of credit cards to students should be prohibited from taking advantage of college students’ vulnerability to cheap offers. College students other than being vulnerable to cheap offers are new, inexperienced, and uninformed adequately regarding credit cards and in the market place. In this regard, marketing credit cards with only advantages will make students accept such offers without understanding how it works and demerits (Dickler). As a result, many of them end up incurring hefty sums of debts, which trails back to their parents. Placing more burdens to parents in addition to their normal responsibilities of paying tuition fee and caring for students is unfair and uncalled for especially in the contemporary business world where living standards have incrementally increased. Statistics by US Public Interest Research Group clearly indicates that 61% of students fully depend on their parents for fee and all other educational costs, with 40% and 38% relying on scholarships and loans (Dickler). Consequently allowing business to market credit cards within campuses only takes advantage of students’ inexperienced thereby placing additional burden to parents and therefore needs to be prohibited in order to avoid unnecessary inconveniences. The United States of America has experienced a downturn in economic growth and development during the recent financial crisis. Recent financial crisis is believed to have originated from the US as a result of increased loans and debts held by both personal and corporate organizations (Nunley). Marketing of credit cards to students within campuses will not only increase the number of credit card holders but also increase the amount of credit or debt incurred by such students. From this perspective, since most of the students have no or limited ability to pay there will be enormous accumulation of debts resulting into further financial crisis, which has negative effect of standard of living. Counter Arguments Even though many people believe it is against the federal law on credit cards for college students to provide credit card to the same and young adults below age of 21 having no steady income of cosigner, it is not clear what qualifies as income and relevant proof that should be used by credit companies to ascertain this condition. Since the federal law fails to clearly define qualification of income and proof for steady income and cosigner, it is not an offence to market credit cards within campuses. In any case, organizations in contemporary business world try to be closer to customers, epicenter of business activities through provision of customized services. Consequently, it will be wrong to argue that marketing of credit cards within campuses is against the Federal Law and should be forbidden. Evidently enough, most of the organizations that market credit cards within campus do so at a given fee. Learning institutions understand and permit marketing of credit cards to students after receiving a fee. The US Public Interest Research Group confirms that campus administrations receive up to $ 1,000,000 for allowing such marketing within their institutions. For instance, the State of Oklahoma established law prohibiting colleges from selling student information as well as marketing of credit cards with campuses (Nunley). Nevertheless, this law was softened upon realization and confession from the University of Oklahoma that exclusive marketing agreement with card issuers enabled the campus to obtain revenue of approximately $ 1m. Stopping marketing of credit cards within campuses would therefore mean that such revenue will be unattainable. Laws prohibiting marketing of credit cards within campuses should be softened or removed altogether in order to enhance chances of campuses to gain revenue. Marketing of credit cards to students within campuses is one way of providing customized services to clients by credit companies (Nunley). As a result, students are served without having to travel to credit companies and banks making long queues for signing up of credit cards. Many students will benefit from services of credit cards especially given that it is safer than carrying cash. Hence, it will be prudent on this basis to enhance marketing of credit cards to students within campuses in order to increased customized services while reducing time wastage going to sign up in the credit companies. Conclusion Credit card companies have increasingly and aggressively targeted students within campuses taken advantage of their naivety, inexperience, and lack of information to convince students sign up for credit cards. Despite the fact that Federal Law has not defined how to qualify steady income and proof for meeting conditions required to issue credit cards, it is still wrong for credit companies to use such a loop whole in enticing students signing up for the same. It is unfortunate that credit companies are getting involved in unethical business practices of cheap offers and deceptive marketing strategies to convince students. Though many institutions will admit receiving revenue from marketing agents, there is still no guarantee for marketing credit cards within campuses. In any case, such institutions survive with or without revenue from credit companies. Therefore, credit companies should not target college students on their campuses while marketing credit cards. Works Cited. Chu, Kathy. Credit cards go after college students. ­Web. September 11, 2011. Dickler, Jessica. Credit card debt on campus. Web, September 11, 2011. Nunley, Dan. Credit card companies aggressively target college students. Web, September 11, 2011. Uspirg.org. “The campus credit card: A survey of college students and credit card marketing”. Financial Privacy & Security Reports. Web. September 11, 2011. Read More