Kerry DoughertyThe shark wore a suit. Worked in a bank. And was circling my kid.
It was last August. A month before the financial meltdown. I watched as a bank employee tried to persuade a person with no income - zero, nada, none - to get a credit card.
That unemployed person was my teenage daughter, just days away from her first semester of college.
We'd stopped to open a checking account, and a professional-looking woman quickly moved in for the kill. The plastic pusher glanced at the information on the application and told my daughter that "of course" she'd also want a credit card.
"She doesn't have a job," I interrupted. "Why would you give credit cards to people without income?"
"A credit card is the best way to build credit," she replied.
"Build credit?" I retorted. "It's the best way to ruin credit."
Undeterred, she continued to push.
"You don't have to use it, of course," she reassured my daughter, "and it would have a low credit limit. But a credit card can come in handy if there's an emergency."
"Or," I sniped, "if you want things you can't afford."
My kid, in an attack of sanity or mother-induced embarrassment, stood up.
"I don't need a credit card. Thanks, anyway."
The bank officer shot her a sympathetic look and told her that all she had to do was call - presumably when her cranky mother wasn't around - and the card was hers.
"Please, don't call her," I begged, once we were outside. "A credit card is like crack. You start using it and you can't stop. Next thing you know, you owe thousands of dollars."
For once, my daughter listened, and she survived her first year of college without a credit card. According to recent news reports, that makes her an unusual student. As Congress debates credit card reform, some troubling information has emerged concerning students and credit card debt.
A study by education funding giant Sallie Mae found that the majority of college students have credit cards. Are you sitting down? Half of all students have at least four. Four! The average student balance is $3,173.
And the interest rates? Who knows? Could be 20 percent. Or higher.
Look, it's bad enough that working adults promiscuously use credit cards to live
beyond their means and that credit card companies then turn around and fleece these folks with outrageous interest rates. But it's unconscionable that card companies also prey on cash-starved students, trying to hook them on easy credit before they land jobs.
Banks and credit card companies may get spanked soon. The president is pushing Congress to pass a bipartisan credit card bill next week.
But Washington can't do it all. Parents have a role. This year's best high school graduation gift may be a book on personal finance.
And a heart-to-heart with your credit-craving student.
Kerry Dougherty, (757) 446-2306, kerry.dougherty@cox.net
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I'm embarrassed
As a banker, I am more than embarrassed by the tactics credit card marketers use to push debt on college students. What the banks do is unconscionable. I taught all four of my kids to never get a credit card while they were in college, and thankfully they have all held to that standard. Credit cards for college students is just plain wrong!
Not at all surprising
Before I went to college, I was issued a credit card, with my dad as a cosigner, with a low limit mainly to be used for emergencies or things that my parents were going to pay for, such as my books for school. Anything other than that, I paid off in full myself every month from money I had earned from my job. I quickly realized that I was not the norm. One big problem is that these companies set up tables on campuses across the country and draw students in with free t-shirts or a card with your school mascot on it, etc. etc. They couldn't care less that half the kids getting these cards have no job and no source of income besides mom and dad. I'm so thankful that I was taught financial responsiblity from my parents and never fell into that trap.
Last I heard...
USAA has a card that a parent can set the limits. It is a great way to start them using one with only a few hundred dollars limit and get their credit started and their checking accounts are great too and you do not have to qualify for those services. Try to stay away from some of those local credit unions, I have seen people in their twenties go in there and get sold a high commission annuity.
Banks and credit card
Banks and credit card companies make the heretofore despised and criminal loan shark seem benevolent. Who needs to go to jail with the "best" of Enron now? Despite deregulation, surely it'll be easy to uncover illegal practice for prosecution.
Credit card companies are the scourge of our Country
If terrorist wanted something or someone to destroy our country, they could find no better ally than Bank of America.The despicable deregulation of these banks in 2003 to give them card blanc to raise rates arbitrarily and to set their own rules was disastrous. Amazing how Bank of America actually made more money in late fee's than in the interest made from the loans. The entire way they conduct business is no more than stealing. Kerry, you were nice to the Banker. Personally I would have gone somewhere else to do my business and get away from the lecherous practice that goes on in your bank.
jwb