The credit card companies actually target college kids. You know, those people engaged in an activity primarily intended to equip them to make a living -- later -- and, uh, pay their bills. Future bills. College kids, by and large, have the kind of jobs that require hairnets and ought to be paying for beer, condoms and marijuana-laced trips to foreign countries that they will only hazily recall afterwards. Increasingly, many are having to work to be able to afford to go to college at all. To the untrained eye, they would appear to have little to offer a sane credit lender. Except, of course, for parents likely to bail them out. They're not even considered high risks (only those under 18 need parental consent or a cosigner; often parents first learn of junior's credit card when those nasty "give us our money" phone calls start coming). Bombarded with card offers from the first day of freshman year, the number of full-time students with cards in their own names rose from 58 percent in 1996 to 63 percent last year. Many pay in full each month, but more and more make only the minimum payments, with which it can take consumers between five years and a full millennium -- depending on the hysteria factor of whoever's doing the calculating -- to pay off a $500 debt. Suffice it to say that the minimum payment is for suckers.

A University of Minnesota study showed that two-thirds of students being treated for depression had more than $1,000 in credit card debt. As debt increased, grade-point averages plunged. And students with high balances worked more hours and dropped more classes. Duh. If you want a surprise, though, here's one: Professor Elizabeth Warren of Harvard Law School projects that 150,000 people younger than 25 will declare personal bankruptcy in 1999. No wonder people in their 20s think reality bites.

In 1998, 160 four-year schools barred card marketers from their property. Other schools have merely raised the price of access, while some that allow marketers access restrict their movements and tactics. In acknowledging that costs and other barriers have risen in targeting the college crowd, Ed Stanley, president of a firm that markets credit cards to students, told the American Banker, "We simply have to be more creative." Did anybody else's skin just crawl?

And while it's working harder to hook you, the credit industry is also trying to make it harder for you to slip the hook and get relief from your debts. HR833, the Bankruptcy Reform Act of 1999 (and its Senate counterpart, SB625), are percolating through Congress, determined to make it more difficult for debtors to discharge debt through Chapter 7 "fresh start" bankruptcy. The bill would cattle-prod them straight to Chapter 13, which requires court-overseen debt prioritization and repayment. Given all the "personal responsibility" and "bankruptcy abuse" rhetoric zinging around Capitol Hill, the insolvent can only thank God that bankruptcy is a constitutionally protected right. Rep. Sheila Jackson Lee, D-Texas, calls it "financial crack" -- a "consumer lending industry [that] actively solicits unsuspecting consumers through the mail with terms of easy credit [and] buy-now-pay-later jargon. And then after addicting debtors, lenders are advocating for [bankruptcy] reform. Of course, debtors are responsible for financial obligations that they incur; however, lenders must assume responsibility for their actions in creating [this] precarious financial crisis." A similar reform attempt died in the Senate last year, but that battle is far from over.

Of course the credit card companies are trying to make consumer bankruptcy more difficult even as they make more and more irresponsible loans (their debt loss rate -- debts that must be written off -- is at least 2 percent higher than in the 1970s). You can't blame them, though. We just make it easy for them. Ninety-six percent of consumers pay their bills on time; only 1 percent end up in bankruptcy. Those who do usually have staggering medical bills, a recent divorce or bouts of unemployment: They have an excuse. But the rest of us just shop and shop and shop. Make the minimum payment. Shop some more.

Legend has it that David Talbot financed Salon partially with credit cards. I financed my writing career that way. Fledgling directors have gambled everything to bankroll their movies with this insidious plastic. What are you mortgaging your future for? Like Vince Passaro told Salon in his own defense earlier this year: "There's a big problem out there, and not just with the Passaros."
salon.com | April 26, 1999

- - - - - - - - - - - -

- - - - - - - - - - - -

  Get a printer-friendly version

  E-mail a friend about this article

- - - - - - - - - - - -

Search Salon