The governor of New York is investigating credit card marketing practices that target college students. New York Attorney General Andrew Cuomo has asked that all colleges and universities in the state “submit any exclusive contracts they currently have with credit and debit card companies so that his office can examine them for problematic marketing practices,” according to a statement. The attorney general also asked schools to adopt policies that would help their students avoid credit card debt.
Burdened by credit card debt
“Today’s students are facing a growing mountain of debt that can burden them long after graduation,” Cuomo said. “As a new school year begins, we want to make sure that colleges and universities are doing all that they can to help students avoid financial dangers. Especially in this difficult economy, schools must ensure that credit card companies are not engaging in deceptive marketing practices and jeopardizing the futures of their students.”
Among the questionable marketing practices:
Some schools release student contact information (without consent) to credit card marketers
Credit card firms pay schools to have the exclusive right to market to students
Some schools have deals to get a percentage of finance charges from certain accounts
Students need help with debt
Credit card debt among college students has steadily risen, making it difficult for graduating students to pay other bills and expenses. Many students have found themselves unable to find debt solutions to fix their finances and have turned to bankruptcy. The average college student graduates with almost $4,100 in credit card debt; that’s in addition to about $20,000 in student loan debt for four-year college students.
A major U.S. credit reporting bureau recently released a survey identifying the top ten cities with the highest consumer debt levels, and citing possible influences on how and why consumers in certain areas may incur more debt:
Income: With employers cutting wages and salaries and reducing benefits, Americans are making less. In areas particularly hard hit by unemployment, such as Detroit, consumers are more likely to rely on credit cards for purchasing power.
Declining home values: In the heyday of rapidly escalating home prices, homeowners could access home equity to finance cars, home improvements, and other expenses. Now that credit is tight and home values have declined in many areas, consumers are looking to personal loans and credit cards to finance their expenses.
Regional lifestyle and cultural influences: According to the survey, some states are more frugal than others. This is caused in part by differences in spending habits. West Virgina residents spend about half of what Connecticut residents spend on clothing and hobbies; coastal cities typically spend more than inland cities.
Although studying the demographics of consumer spending is fascinating, it’s not intended to provide an excuse for excessive spending. Developing a debt management strategy that works requires self discipline and your ability to understand:
How much you owe: This amount varies from month to month depending on changing finance charges (annual percentage rates [APRs]), your card usage, and how much you’re paying toward your balance each month.
How much your debt costs: Credit card companies are now required to show how long and what it costs to pay off your balances with minimum payments. One look at those calculations serves as a wake up call.
How much you can afford to pay toward your debt each month: Families can easily slip from using credit cards occasionally to using them for everyday expenses. Establishing a cash based household budget that allows you to stop using credit cards for essential expenses is a big step toward reducing your credit card debt.
How and where to find help: It’s no secret that many of us are not good at math, budgeting, or accounting, or we’re afraid. Carrying credit card debt also involves some degree of denial. Getting debt help through credit counseling and debt consolidation agencies can help you arrange affordable debt payment terms and help you set up a cash based budget.
Don’t be embarrassed about seeking help through consumer credit counseling and debt consolidation services. They can help you reduce debt and re-establish financial security.
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Chris Rocks is the Regional Director of the National Credit Federation (NCF). NCF is a nationwide membership-based organization that assists consumers recovering from a financial difficulty and those who need a significant increase in their credit score.
Chris began his financial services career as a Financial Advisor helping young families with risk management and asset accumulation strategies. It was during that time that Chris realized that many of these young families also needed someone to guide their choices with regards to debt management.
He made the transition into the mortgage industry where he first worked as a loan originator and later the Vice President of a small mortgage company. As Chris came across clients who had suffered through financial challenges and saw the difficulty they had in re-entering our credit driven economy, he discovered there was a real opportunity to leverage his unique background and help others.
He can be contacted by visiting his personal site, GoodCreditLiving.com.
Francine L. Huff is the Publisher and Editorial Director of Super Savvy Publishing, LLC, which provides editorial and publishing services. She is a gifted author, freelance journalist, and motivational speaker who has entertained and motivated a variety of audiences through workshops, panels and keynote addresses. Francine is the author of The 25-Day Money Makeover for Women, which has inspired and motivated many readers to rein in poor financial habits, become good stewards over their money and work toward a debt-free life. She has appeared on a variety of TV and radio shows. Francine previously worked for the Wall Street Journal, where she was the spot news bureau chief, a news editor and a copy editor. She has interviewed a variety of financial professionals about financial issues and strives to present information about managing money in an easy-to-understand format that is accessible to people of all backgrounds and income levels.
Karen Lawson is a freelance writer with more than 15 years of experience working in mortgage banking and loan servicing. She holds BA and MA degrees in English from the University of Nevada, Reno. She enjoys writing informative articles about debt management and personal finance.