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While this time tested marketing strategy has been used on countless products from cars to credit cards, it seems the credit card companies have been taking the technique to new heights. From a marketing perspective, it makes sense to try and get as many of the nation's 31+ million teens to develop a preference for your product as possible. Because most people are creatures of habit, if they like your product, they'll remain loyal users of it throughout their adult lives. Teens are also a lucrative market for many companies, not just credit card companies. In 2005, the teen demographic spent over $100 Billion of their own money on various products and services. That, coupled with the desire to capture a consumer's brand loyalties as soon as possible in their spending lives, means it's not a market that very many firms can afford to ignore.

Is there a dark side to all this? Well of course there is! It seems that many credit card issuers are doing something more akin to plucking the ripe fruit from low hanging branches. Instead of focusing on developing long term customers, they are targeting teens to try and get as much short term billing as possible. According to a  recent Jumpstart Coalition survey, 1 out of 6 high school seniors had credit cards in their own name. They, of course, know full well that many in this age group (and many well beyond it) are in no way mature enough to handle a credit card. The proportion of bankruptcy filers under 25 has risen 500% in then last 10 years. While for many having a credit card at a young age can be a valuable learning experience, for many others it can be the first step on a road to a life long relationship with excessive credit card debt - And that's just how the credit card companies like it.

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Posted by debtblog at 01:21 PM | Permalink | Comments (0) | TrackBacks (0)

The Reverse the Raid on Student Aid Act of 2006,  H.R. 5150, was introduced into congress on April 13th by  Illinois democrat Dick Durban. Sounds great, but what is it really?  According to co-sponsor George Miller: “The high cost of tuition should never prevent a qualified student from getting a college education, but Republican leaders in Congress apparently don’t see it that way,” Miller said in an April 13 press release from his office. “Democrats want to take America in a new direction, and that includes reversing the Republican raid on student aid and making college more affordable for all students and families.” He may have a point, but it sounds like more of the partisan sniping we have grown accustomed to over the last few years.

In yet another area, the roles of Republicans and Democrats seem to be equalizing. In the past, Democrats never saw a spending or tax package they didn't like, while the Republicans wanted to limit government size and spending. No more. The parties are both equally adept at spending your hard earned tax dollars and growing government at a prodigous rate. In one of the only areas where they should be spending money, education, the Elephants are trying to cheap out on us.

One of the keys to America remaining competitive in the global economy is having a highly skilled and educated workforce. Now, with China and India lapping at our heels, is not the time to steer clear of providing American employers with a deep, home grown talent pool. In order for that to be possible, our young people need to be educated beyond high school. The economy demands it.

There should be special, low interest loans for students of math, science and engineering. America was built because Americans seemed to always find new and innovative ways of doing things. 'American Inventor' notwithstanding, we have seen that position steadily eroded over the past few decades. We need  new workers that can develop computer software, not just play games on it. We need researchers in the areas that will power the economy of the future, such as materials science,  nanotechnology and alternative energy. To allow American companies to develop the next generation of products, and derive the maximum benefit from them, we need American scientists in the laboratories and workstations, not just in the boardrooms.

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Well, it looks like the new bankruptcy legisplation is really paying off....For The Banks! Wells Fargo posted record 1st quarter earnings of over $2 billion. Likewise, U.S. Bankcorp saw record profits in the first quarter of 2006. Both banks cite the lowered cost of credit as a key component of the record levels of such earnings. Now we can see why the lobby for the financial industry were so keen to get the revised bankruptcy legislation through congress last year. With record profits all around, they're sure to get their contracts extended, and their principles will no doubt get hefty bonuses.

 
If there was any doubt about who was really benefiting from the American public's unquenchable thirst for credit, that doubt should all but be erased. It's a shame that our economy is fueled by this drive to extend our credit limits and plunge ouselves deeper into debt at the cost of our futures, both as nation and as individuals. As we bolster the bottom lines of the major financial institutions at the cost of our own, we can only hope that the engine of economy keeps chugging away, for if it falters, we'll do the same under the crushing debt loads we've subjected ourselves to over the past decadce.

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