Credit Cards Target Teens

Credit Cards Target Teens



Most of us realize that in the past, credit card companies have been targeting teens and college students. Perhaps we do not realize how successful they have been until we hear that 87% of college students with credit cards report that they only pay the minimum payment each month and their average balance is between 2-3 thousand dollars.

President Obama signed the Credit Card Accountability, Responsibility and Disclosure Act of 2009 into law in May of 2009. In this bill, the teen market is addressed; young people under the age of 21 will now need a parent to co-sign for credit unless the teen is able to show a sufficient means of income. What constitutes sufficient is not clear nor is there an industry standard. Changes in the new law may affect how teens get credit but it is certainly not a guarantee that a student can't get a credit card without parent's approval or signature.

Teenagers have spendable cash. They also freely spend it and are not as willing to wait for the things they want. The credit cards companies know this. Between part time jobs, allowances and cash from parents, teenagers shelled out $295 Billion in 2006, compared with $94 Billion in 1999, according to a Harrison Group survey. Check out your local mall and you will see the truth in those reports. Teens have proven to be a rich market for credit companies with a constant new supply of future lifelong customers.

This isn't just the major credit cards either. Store chains that have their own store brand credit cards push just as hard to get the teen employees to open accounts even requiring the use of these cards to take advantage of employee discounts. Parents of some of these teens report that they were neither notified nor did they sign for their teens to get these cards. Under the new law, tougher restrictions may put a halt to these overt tactics but with the prize of the teen market being so lucrative, credit card companies are not about to ignore this teen market.

The changing tactics used by the credit companies may be simple and unobtrusive but the message is still getting out. Vending machines that accept plastic, online books for school and events sponsored by the credit card companies are all still in play. Even the points systems are altered to fit the interests of teens on specialty cards promising 0% rates to start with details hidden in the small print. How cool is it to have a credit card that highlights your favorite football team or one all decked out with Hello Kitty? (What age group are they targeting with Hello Kitty?)

Credit card companies are getting creative and have found ways around the new regulations. With financial incentives that offer to sponsor events or even school sports programs, many cash strapped school districts find it difficult to resist. These companies offer students money to get their friends and dorm roommates signed up, with give-a-ways as incentives. Might still be against the rules, but it isn't the credit companies doing the actual selling.

Schools have not addressed debt and credit in their curriculum and many parents feel that this subject should be taught as a mandatory class while others firmly believe that this is something that parents need to pass on to their own kids. With far too many parents getting caught in the trap of credit card debt, and with the warning labels of credit written in legal details, teaching discipline with credit can be daunting. Our children learn from watching us. If we, as parents, are sloppy with our credit, we are teaching our kids to be sloppy with theirs. However they learn, teens need to learn the benefits of credit while learning how to avoid the pitfalls of bad credit.