Usage of Credit Cards Received Through College Student-Marketing Programs

This article provides benchmark measures of college student credit card usage by utilizing a pooled sample of over 300,000 recently opened credit card accounts. The analysis compares behavior over 12 months of account history for three groups of accounts: those opened by young adults through college student marketing programs; those opened through conventional marketing channels by young adults ages 18-24; and those opened through conventional channels by older adults. Results indicate that student marketed accounts have smaller balances, lower credit limits, and lower utilization rates than accounts opened by the other groups. Student accounts are more likely to be delinquent and have a higher likelihood of charge-off, but both the delinquency and charge-off rates for student accounts and non-student-marketed accounts of young adults converged within 24 months. These findings are consistent with card issuers’ statements that they establish student accounts with relatively low credit limits expecting that the large majority of new, young cardholders will learn how to manage a credit card, establish a credit history, and become longer-term customers