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Subprime Loans Just the Start of Students’ Debt

Personal_Finance / Student Finances Jul 28, 2014 - 06:58 PM GMT

By: Money_Morning

Personal_Finance

Shah Gilani writes: This is amazing.

If you’re about to become a college student, if you’re already a college student, or if you’re simply in debt and need more credit and plan on becoming a student again, you’re in luck.

Financial services giants Discover Financial Services Inc. (NYSE: DFS), Capital One Financial Corp. (NYSE: COF), Bank of America Corp. (NYSE: BAC), Citigroup Inc. (NYSE: C), and U.S Bancorp (NYSE: USB), to name a few players in the student credit game, are bending over backward for you.


The folks at Discover want you to “Get the card for college and beyond.” They’ve named and registered it as “Discover it chrome for Students” because, after all, they’re “Looking out for you.”

But they aren’t the only do-gooders looking out for you. You can also apply for the Capital One Journey Student Rewards Credit Card, the Bank of Americard for Students, the U.S. Bank College Visa Card, or the Citi Dividend Platinum Select Visa Card for College Students.

Heck, why not apply for all of them?

But wait.

Before switching screens to sign your life away – I mean, fill those applications out – let me tell you a little more about this latest attempt to take all your money.

Understanding Your Needs

Don’t worry. The credit card companies know all about your student loans – or the loans your parents took out for you. Or that you are parents who have more to learn because you don’t have the job skills you need to pay down the debt load you already carry. They know that, after all the money you’ve already borrowed, you still need more.

They get it.

You need to buy books, food, and gas to take you to and from campus. Or maybe you just want to throw down a card for beers and wings for you and your friends at the pub. They get it.

Not all financial service companies get you. Some get you more.

Take the good people at Discover.

They want to incentivize private student loan borrowers earning a 3.0 or better with an inspiring 1% cash-back reward on what you spend. That’s chrome! It’s better than gold.

To be fair, these are hardworking students. No not “hardworking” as in having a job, but “hardworking” as in debt-building future indentured slavebots.

But that’s just the beginning, and it gets better. If you don’t have a 3.0 and are just an average idiot, you are rewarded with 2% cash back when you use your chrome card for gas or at restaurants, up to $1,000 in combined purchases each quarter.

And the 1% cash back for you smart kids, well, there’s no cap – so spend, Smarty, spend!

To keep earning all that cash, you just have to stay in school and keep up that 3.0. Who knew?

Oh, you’re thinking there must be a catch. No, there isn’t. It’s all good.

It’s academic.

There’s no annual fee. Paying late won’t raise your annual percentage rate (APR). There’s no late fee (on your first late payment). There’s no over-limit fee. There’s no foreign transaction fee… and you thought that semester abroad was out of reach.

You have a $0 Fraud Liability Guarantee, so you’re never responsible if you lose your card at a rave. The card is accepted at 9 million merchants nationwide. And because you’re up studying late, you can pay your bill up to midnight the day it’s due, by phone or online.

You are online, aren’t you? No?

Then, use the card to buy a computer – duh.

Why am I singling out Discover? No, the folks there didn’t pay me to advertise their student cards.

It’s just that on their website they compare how they stack up to Capital One, Bank of America, U.S. Bank, and Citi. And, for now, they’ve got those slackers beat. But I expect the dark horses will run harder when the school year kicks in shortly.

Speaking of coveted student borrowers, Discover CEO David Nelms recently said in an interview with American Banker, “They’re going to grow into more substantial relationships over time. And so we’ve launched a product that is a little more targeted toward them.”

If you’re a student, check your back to see if you have a target there. If you do, welcome to the already overcrowded club of financial services servants.

Oh, and about that interest rate, it’s only 19.8%. And you didn’t believe me that there was no catch.

Source : http://www.wallstreetinsightsandindictments.com/2014/07/subprime-loans-just-start-students-debt/

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Disclaimer: Nothing published by Money Morning should be considered personalized investment advice. Although our employees may answer your general customer service questions, they are not licensed under securities laws to address your particular investment situation. No communication by our employees to you should be deemed as personalized investent advice. We expressly forbid our writers from having a financial interest in any security recommended to our readers. All of our employees and agents must wait 24 hours after on-line publication, or after the mailing of printed-only publication prior to following an initial recommendation. Any investments recommended by Money Morning should be made only after consulting with your investment advisor and only after reviewing the prospectus or financial statements of the company.

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