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Sallie Mae Credit Cards Poor Decision
#1
I'm not American so it might not be my place to speak but I was listening to Dave Ramsey and saw that Sallie Mae offers credit cards to college students? I thought debt in America was a problem especially student loan debt?  You know Americans typically earn more than their counterparts on other countries just because they are in America, but with this, it seems to me that many students will be coming out of college with student loans in addition to credit card debt putting them at a severe disadvantage in life, I dont understand the culture, but how can the government allow this? How is this even legal? This seems like it will put future Americans at a disadvantage cause even with higher earning jobs, they will start life with a negative net worth.

This looks like a very poor decision.
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#2
(07-05-2019, 03:43 AM)armstrongsubero Wrote: I'm not American so it might not be my place to speak but I was listening to Dave Ramsey and saw that Sallie Mae offers credit cards to college students? I thought debt in America was a problem especially student loan debt?  You know Americans typically earn more than their counterparts on other countries just because they are in America, but with this, it seems to me that many students will be coming out of college with student loans in addition to credit card debt putting them at a severe disadvantage in life, I dont understand the culture, but how can the government allow this? How is this even legal? This seems like it will put future Americans at a disadvantage cause even with higher earning jobs, they will start life with a negative net worth.

This looks like a very poor decision.

This isn't anything new. Many traditional college campuses allow credit card providers to come on campus to sign up college kids for credit cards. This usually happens during big campus events, like new class registration, career fairs, etc.

The problem isn't so much with providing credit cards to these students. The problem is the lack of education around how to responsibly manage the use of credit cards (and other forms of debt financing like college loans). There are times where it makes sense to put expenses on a credit card, but a lot of students are first-time credit card users and think that a credit card means free money. So they use the card like crazy without thinking about the consequences.

Some colleges do offer personal finance courses to address this deficiency, but I think they should be mandatory as part of a General Education requirement. It would be awesome if completing a course like that was a prerequisite for acquiring a credit card. Though that is completely unreasonable to implement in reality. Making it a GE requirement would fill that role pretty well though.

In any case, the government doesn't place any limits on who can have a credit card (though this is largely self-regulated by the need to be of legal age to enter into a contract and possess a certain credit rating). It only regulates the banks who issue credit cards to ensure they are acting in good faith and providing full transparency about rates, etc.
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#3
@Merlin wow....thats really dangerous! Here credit cards are strictly regulated and the bank wont issuse one unless you've been working for 3 years and many times they require a security deposit equal to the value of the money on the card, even the debit VISA has a similar process like a credit card to getting it. This means hardly anyone has credit card debt and I mever heard anyone saying 'I am behind on mt credit cards'.

Hmmm thanks for the insight, I was just wondering about that. Credit Cards are nasty and there should be more regulation around them. Giving a credit card to an 18 year old Interpretive Dance major who is already taking out student loans they may die and never pay off for is pure evil to the student as even working adults struggle to make payments in rhe US based on what I read.

The APR on these cards are 15.24% to 25.24%! Wow! Even with proper 'management' credit cards in the hands of a booze drinking, impulsive 18 year old is horrible and irresponsible of financial organisations to do this, terrible idea! Credit is bad.....

Anyway thanks! I was just really curious about that...
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#4
Wow, one more way to allow our kids to over-borrow. Parents have to talk to their kids about the dangers of over-borrowing. I'm starting to think that the issue isn't tuition costs, it's the "living expenses" that are written into student loans that are killers - so now you can get another credit card? Big problem imo.
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#5
I'm a college student, obviously, and I have multiple credit cards. They have been a great benefit to me, because I always pay them in full and make quite a bit of cash back and sign up bonuses, and have built a very solid credit score for someone my age that I'm hoping will come in handy when I'm ready to purchase a house. So obviously I'm glad that it's not illegal to give a credit card to a college student, but good Lord the amount of irresponsible credit card use out there is astounding.

Note, however, that it's not totally unregulated - if issuing a card to someone younger than 21, credit card companies are required to consider their income and ability to repay.
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#6
@mysonx3 you are the exception based on what I'm reading and listen to about the US. Adults with mouths to feed are so irresponsible. Muchless those kids.

And like Dave Rsmsey said a credit score only matters if you want to borrow, and your aim should be to be debt free....not owing on credit cards....I switched from credit card to debit visa and I dont feel the difference...if you need a credit card to cover your expenses its a bad position to be in financially.

For me if someone can pay thier credit card in full, then they dont need one, they can buy with cash (debit) and save. I aint giving the bank a red dime. I even switched to credit union and money market funds cause the bank takes money for 'maintainence' to rent out my money...no way...

To each his own..but for me all credit is bad credit. Borrowing to buy a reasonable house is the only exception and understandable...but taking credit cards to live? No way..

And its worse for these college kids....its a disaster and I feel sorry to them...its setting them up for a life of debt.

Hmmm well looking at how the system works it seems that their ability to pay is based on thier projected income for their major right? That Ufology or Interpretive Dance major is never going to be able to pay that...there may be a few rare cases...but we all know 44 million people are $1.3 TRILLION dollars in student debt...and $1.04 TRILLION dollars in credit card debt...$8.94 TRILLION in Mortgage Debt and $1.1 TRILLION in auto debt...

Its not really my place to say anything, but this will make it worse and I really think your goverment should really step in...cause these 18 year old kids will die in debt...
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#7
(07-05-2019, 11:05 AM)armstrongsubero Wrote: @mysonx3 you are the exception based on what I'm reading and listen to about the US. Adults with mouths to feed are so irresponsible. Muchless those kids.

And like Dave Rsmsey said a credit score only matters if you want to borrow, and your aim should be to be debt free....not owing on credit cards....I switched from credit card to debit visa and I dont feel the difference...if you need a credit card to cover your expenses its a bad position to be in financially.

For me if someone can pay thier credit card in full, then they dont need one, they can buy with cash (debit) and save. I aint giving the bank a red dime. I even switched to credit union and money market funds cause the bank takes money for 'maintainence' to rent out my money...no way...

To each his own..but for me all credit is bad credit. Borrowing to buy a reasonable house is the only exception and understandable...but taking credit cards to live? No way..

And its worse for these college kids....its a disaster and I feel sorry to them...its setting them up for a life of debt.

Hmmm well looking at how the system works it seems that their ability to pay is based on thier projected income for their major right? That Ufology or Interpretive Dance major is never going to be able to pay that...there may be a few rare cases...but we all know 44 million people are $1.3 TRILLION dollars in student debt...and $1.04 TRILLION dollars in credit card debt...$8.94 TRILLION in Mortgage Debt and $1.1 TRILLION in auto debt...

Its not really my place to say anything, but this will make it worse and I really think your goverment should really step in...cause these 18 year old kids will die in debt...
I've never had any debt, credit cards or loans of any kind but credit cards do have a value to people with financial discipline. One can get a credit card that has no fees and use it the same as they would a debit card, then be sure to pay it off in full and avoid all interest. Some of those credit cards then offer cash back or other rewards which are basically free money. Then, this allows one to build credit, which can get one a better interest rate on their home loan.

All this only works of course if someone uses their card with discipline, spends only what they can back up with cash, and always pays it off immediately (some cards allow you to set this up automatically if connected to a bank account).

I think better financial training could certainly help but there will always be an imbecilic segment of the population that will make poor choices.
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#8
(07-05-2019, 11:35 AM)MNomadic Wrote: I've never had any debt, credit cards or loans of any kind but credit cards do have a value to people with financial discipline. One can get a credit card that has no fees and use it the same as they would a debit card, then be sure to pay it off in full and avoid all interest. Some of those credit cards then offer cash back or other rewards which are basically free money. Then, this allows one to build credit, which can get one a better interest rate on their home loan.

All this only works of course if someone uses their card with discipline, spends only what they can back up with cash, and always pays it off immediately (some cards allow you to set this up automatically if connected to a bank account).

I think better financial training could certainly help but there will always be an imbecilic segment of the population that will make poor choices.

I try to avoid debt as much as possible as well. The only debt financing I carry is the mortgage on my home, which has a balance of like 25% of the last appraised value of the house.

However, I do have credit cards, but I only use them as a way to manage my money and avoid carrying cash. The main card I use also has a cashback program, so a lot of time I end up making money back on stuff I'd be paying cash for anyway. I also use the cards as a means to categorize expenses. For example, one of my cards is only used for business expenses.

All the credit cards I have charge no interest as long as you pay off the balance in full at the end of every month. Which I do.

People get into problems when they get into the habit of making minimum payments (which is effectively an interest-only payment) and spend beyond their means to pay back.

Managing money and credit is something I'm planning to teach my daughter about once she's old enough to start worrying about such things.
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#9
(07-05-2019, 11:05 AM)armstrongsubero Wrote: @mysonx3 you are the exception based on what I'm reading and listen to about the US. Adults with mouths to feed are so irresponsible. Muchless those kids.

And like Dave Rsmsey said a credit score only matters if you want to borrow, and your aim should be to be debt free....not owing on credit cards....I switched from credit card to debit visa and I dont feel the difference...if you need a credit card to cover your expenses its a bad position to be in financially.

For me if someone can pay thier credit card in full, then they dont need one, they can buy with cash (debit) and save. I aint giving the bank a red dime. I even switched to credit union and money market funds cause the bank takes money for 'maintainence' to rent out my money...no way...

To each his own..but for me all credit is bad credit. Borrowing to buy a reasonable house is the only exception and understandable...but taking credit cards to live? No way..

And its worse for these college kids....its a disaster and I feel sorry to them...its setting them up for a life of debt.

Hmmm well looking at how the system works it seems that their ability to pay is based on thier projected income for their major right? That Ufology or Interpretive Dance major is never going to be able to pay that...there may be a few rare cases...but we all know 44 million people are $1.3 TRILLION dollars in student debt...and $1.04 TRILLION dollars in credit card debt...$8.94 TRILLION in Mortgage Debt and $1.1 TRILLION in auto debt...

Its not really my place to say anything, but this will make it worse and I really think your goverment should really step in...cause these 18 year old kids will die in debt...

I don't disagree with much of what you're saying here. I do want to respond to the bolded, however. I agree that if you can pay off the card in full, you could just as easily use a debit, however there are some benefits to using a credit card even when you don't need to. For example, I have made close to a thousand dollars in credit card signup bonuses and cashback in the 16 months that I've had credit. Also, I spread my money around various accounts to take advantage of promotional "X% APY on up to $Y" savings rates, and it would be a hassle to always try to remember which account has the money in it for each expense. By putting it on a credit card, I only have to deal with knowing what account to take money from once a month (when I pay my CC bills).

But I agree, I am the exception, especially for my age.

I guess the question is, if the government decides to step in, what should they do?
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#10
@mysonx like I said to each his own, but thats my stance, everyone manages their finances differently. I'm with Ramsey on this one, like he said the 'cash back' dosent warrant their use 1% or 2% cash back is too little especially since you are charged a fee every time you swipe. All that cash back and free miles is just good marketing that encourage people to use the cards and make momey for the bank. Do the math, its not worth it. Think sbout it why will the bank give you free money and spend all that money advertising it? All that 'rewards' stuff mask their true intentions.

Well for one the goverment shouldn't let these institutions give credit cards to people who are earning less than a certain amount per year as it can lead to financial ruin.

The governemnt should also forbid giving or allowing credit cards to be given to anyone who isn't gainfully employed for at least 3 years unless they have the security deposit to cover the amount on the card....it might seem restrictive, but it'll work...anyone else can use a debit for their plastic needs. I mean really a debit card is really good, you dont need to walk with cash and you dont spend what you dont have.

It seems a lot of the problem is that people who cant pay off credit cards are using them, a guy making 20 or 30k a year or a broke college student with a credit card is a disaster waiting to happen.

This needs to be fixed now, cause its out of control.

Reading I just saw in 2017 Visa and MasterCard made 43.4 billion in swipe fees...
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