Business Strategies for Targeting Students for Credit
Business Strategies for Targeting Students
Credit card companies have long since figured out that college students are a lucrative market. They have perfected several different techniques to persuade these students to apply for and use their cards.
Credit card companies target college students for several reasons:
• College students have some income and have lower living expenses than non-students of the same age.
• College graduates have a 75% higher earning potential than non-graduates, and are inclined to keep the cards after college that they had in college. College students are a good investment for the future.
• Even if students are late with their payments or carry a balance, the company makes money from interest and fees.
• College students are more likely to make impetuous decisions about their credit and spending habits.
• College students are more likely to have financial safety nets, including support from parents and term-related financial aid.
• College students are more likely to hold affiliate cards, such as university logos or sports teams, thereby benefiting the affiliate and the card company.
Credit card issuers have several ways of targeting the college student market. Some of these include:
• Direct mail. Dorm students and other campus residents get applications through campus mail. 90% of college students obtain their cards this way.
• The Internet. Credit card providers place ads on sites known to be frequented by college students, including the University’s own sites.
• On campus displays. These keep applications in sight of students and within easy reach.
• Tabling. Credit card companies set up tables in campus buildings to talk to students and answer their questions about credit cards when they stop by.
• Special underwriting procedures. Credit card companies process the application if they know that it comes from a college student. In some cases, which college the students attend makes a difference to whether they are approved; in fact can matter more than their employment status. Interest rates are not fixed but tied to the student’s credit rating and to the prime rate.
• Modified fees. Over half of credit card providers said that they did not charge college students the same fees as other credit card holders.
• Debt counseling. Many credit card providers offer advice on how to manage credit responsibly. A college student may be more inclined to risk applying for a credit card if there is guidance in place as to how to use it.
Student credit cards.com @ July 19, 2008