Getting a Credit Card in College - Dumb, dumb, dumb

We were featured the other day on the Carnival of College and Finance. I have no idea how long ago I submitted our post on College Kids and Credit Cards, but it's been a while. What was more interesting was that there were only two posts under the 'Credit Cards' category - ours and one by CreditShout on The Best Student Credit Cards. I know, as if there is such a thing.

I know that the best credit card for me in college was the one I never signed up for - which was a lot of them.

Out of curiosity, I had to look... what exactly were the best credit cards for students?? What I found nearly made me LOL. For realz.

Now I'm not hatin' on Kevin and his post, but wow, check this out.
The Discover® Student Card is our top pick for student credit cards
because it has an excellent rewards program, a fairly low APR (for a student
card) 14.99% variable, and no annual fee. The Discover Student Card allows you
to earn up to 5% cash back on groceries, gas, travel and at restaurants. You can
then double your points if you cash them in for gift certificates at selected
merchants, effectively earning 10% back on your purchases. If your looking for a student credit card that allows you to earn great rewards, and build your credit without hitting you with an annual fee - this is the best card out there.

What's wrong with this picture? A lot. Lets take a look at the Discover Stupid Student Card.
  1. If 14.99% is a low rate, I'd hate to see a high one. For a kid who likely has no job and no personal finance knowledge, the odds of keeping a zero balance are.... not good.
  2. 5% cash back? Oh sure, I'm sure Junior is going to need all kinds of encouragement to spend money on this thing. Even when Mr. Instant-financial-Savvy doubles it to 10%, that 14.99% from above likely isn't too far behind. Who do you think is winning this one? Not Junior.
  3. What credit card pitch would be complete without the ultimate myth of needing to build your credit. That only works, by the way, if you don't get behind on the stinkin' thing! Even then it's really not worth much.
I think we've Discovered Stupid.

How about this, Junior - You go to school, get your education, and see if you can't finish with no debt and no credit cards. Chances are, you'll be far more financially smart than all the goobers lined up to get that super-cool Frisbee they were giving away with this piece of crap.

image from the situationist who also has a great post on this topic.


Anonymous said...

You are far too hard on credit cards. I got my first one from my parents in college with the sound advice that you only use it to buy things you have the money for. I continue to do just that to this day and in exchange for using my credit cards, get reward checks of between $400 and $600 each year. How is that stupid? Credit cards by themselves aren't stupid. People who use them irresponsibly are...

Mrs. (not) the Jet Set said...

I don't believe that the Mr. is being to hard at all on credit card companies. Most people who think that credit cards are great tools fail to see the big picture.

These companies do make money off of you. The reason is that the store you shop at have to keep their prices higher so that they can cover the fees every time you swipe your card.

I also believe that it is wrong to support an industry that goes against my beliefs and morals. Their collection methods are out of control along with the way they change rates on people for no reason. That is not the kind of industry I want to support.

On the college end consider this. Most kids have never been taught by their parents how to handle money and the example that they saw at home was to swipe everything. Then they go to college get a card and start swiping because that is what you do. Are we to be surprised that suicide is the second leading cause of death for college students? And the number of them caused by debt stresses is exploding.

Anonymous said...

What makes you think that college students don't have jobs? According to the American Council on Education, 78% of them do, which makes them "more likely to work than they are to live on campus, to study full time, to attend a four-year college or university, or to apply for or receive financial aid."

I don't doubt that many college students are irresponsible with money, but having a credit card does not put you in debt if you pay off the balance every month. As a student I find this post condescending towards young people who do work and manage their money responsibly.

Mr. (not) the Jet Set said...

1st Anony-
The Mrs. carried a card through college, never caried a balance and collected sweet, sweet rewards. How is that stupid? The only way to get big checks back is to spend big bucks and studies show (time and time and time and again) that you are spending more, more often, and with less pain when doing it on plastic. You may also want to read on.....

2nd Anony-
College kids do have jobs. The Mrs and I were both in that 78% with jobs while in school. And that really doesn't mean a whole lot. I know what a lot of those jobs are - waitessing, retail, food service... tips, commission, minimum wage, many typically part-time jobs just making enough to maybe cover pizza, beer and gas.

And I know that tons of college kids are irresponsible with money. You may want to note the comments from the Mrs. above as well as the reports cited in the original post - 1 in 4 leaves school with $5k in credit card debt and a slight majority left school with any amount of credit card debt.

And back to the bigger picture... It is a product - a heavily, heavily marketed product - that exudes irresponsibility. Paying of the balance each month is a wonderful theory - you're likely learning a lot about theories right now. Having been through that, and several years of the reality of life after college, I can tell you that a lot can happen in life to cause you not to pay that bill. That's called risk and it's the part you're ignoring.

Thanks for the comments.

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