Student Debt and Credit Education Blog

I’m sure you’ve seen the news concerning the mess the banking industry is in. It’s a monster with a long tail as evidenced by the ripples its causing through Wall Street, job markets and the economy as a whole.

Many students have already found out student loans are harder to get and for the very same reasons, students may find getting a credit card in 2009 nearly impossible.

What is the Banking Crisis?

A number of things such as banking deregulation, a booming housing market and shoddy oversight of the mortgage business all contributed to this mess. What occurred is basically everybody looking to cash in on the skyrocketing housing market and allowing people who had no business taking out loans to do just that.

US banks loaned out billions in sketchy loans, or bought those loans from other sketchy lenders. When the economy started to shrink those homeowners started defaulting on mortgage loans. This caused a cash shortage in many banks resulting in a ripple effect on businesses and other banks which depended on those banks for money.

Now we have a situation where banks just don’t have as much money as they used to for loans. They are forced to be much more careful about who they are going to give loans to and unfortunately since students generally have low or no income and a limited credit history, they are on the wrong end of the safe borrower spectrum. This is why we see student loans becoming more scarce.

Fortunately the government realizes going to college is a good thing and students need those loans so they are working ease this situation. If for the same reasons banks decide to stop handing out credit cards to students, do you think the government is going to step in and help them get credit cards? Unlikely.

The beginning of the end for Student Credit Cards

If you were among those who found it incredible that students suddenly could not get loans for college then you’ll find its no surprise that banks are already pulling their student credit cards off the market. Why? Well a credit card is is pretty much a loan. You are allowed to borrow up to a fixed amount of money which then needs to be payed back at a certain interest rate. A few months ago Bank of America stopped offering credit cards for students. Now we have just learned that Chase and Capital One could be doing the same thing by the end of the year.

So What Can I Do?

1. Be really careful about your credit score. If you don’t know it you should find out and find out how to protect it. It is possible to get a free credit score and you should get familiar with it.
2. Look into getting a student credit card now (below), before it’s too late. It is a good time to start building your credit, as a lot of people have learned the hard way as of late. If you wait, you may not be able to build credit and by the time your ready to purchase a new car or house it could be too late.
   

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• 3 Student Debt Reduction Strategies
• Sorting Through Student Credit Card Offers