Many may recall part of the 2009 CARD Act’s purpose was to protect college students from falling prey to credit card debt, at least while they’re still in college. The solution, or so it seemed, was to keep credit card companies from setting up booths on college campuses. It’s worked – in fact, it’s worked well; now, though, there’s another way of targeting young adults. It’s closer to home than many might thing.
Facebook has long since been the one “thing” to have. Those timelines, hundreds of photos and constant status updates are simply too tempting to pass up. We live our lives, in many ways, through a blue and white interface and down a column named “What’s on your mind?” Co-mingled with all these familiar views and questions are those smaller columns to the right – the ones where all the advertising happens and they’re chock full of great deals, low intro rates and reminders of how many of our friends like any particular credit card’s fan page. Meet the new marketing tool.
Major credit card companies like Visa, MasterCard, American Express and Discover are dominating not only Facebook, but Twitter and other popular platforms. They’re difficult and often simply too tempting to pass up, especially for a college student who believes there’s always tomorrow to pay bills.
One of the bigger consistencies is found in the amount of debt, the type of debt and the age of the debtor in relation to how much is owed. For instance, student loans and credit card debt are slowly creeping higher as we celebrate birthday after birthday. Toss in medical debt, mortgages and car loans, and the numbers become a bit more alarming. But is it the credit card companies faults?
Most experts agree it’s a good first step; however, there’s more – at least according to many – that can and should be done to prevent so many young adults from beginning their lives with overwhelming credit card debt. It used to be that credit card companies and banks offered free gifts, such as toasters or umbrellas, just for applying for a credit card. These days, the modern reward includes online shopping cards and Facebook credits.
As it stands now, students and other consumers under the age of 21 must now show proof of income and the ability to repay any money borrowed or charged on credit cards. Also, many must also have a co-signer before approval.
That’s not enough, though. There are many supporters who say despite the positive steps taken since the CARD Act, there are other things that can be done. One suggestion comes from Professor Eboni Nelson of the University of South Carolina. Among other things, Nelson believes there should be tighter and closely monitored control in terms of marketing to young people, including striking what’s currently defined as and can be used for security.
Nelson believes scholarships, student loans, stipends from parents and grants should not be allowed as collateral. She also is encouraging credit card companies to prove college students can do more than meet the minimum payment. They should be able to prove they have the resources to pay the balances, such as pay stubs. It won’t be until stronger guidelines are put into place that card companies will finally step away from the “easy targets”.
How Effective are Social Media Ads?
Perhaps the better question is “How effective are these advertisements on social media site?” There are no hard numbers, or at least any that satisfied our goal of accuracy, but an ad on Facebook doesn’t mean everyone’s clicking on them. Like all things in advertising, it’s a game of chance and expense – especially if the card companies are losing their advertising dollars for a less than stellar ROI.
As it is, AMEX contracted with FourSquare and both say it’s been financially rewarding. It allows users to take advantage of discounts by spending at participating restaurants, bars and stores when they use their American Express cards.
Some of the card companies, including Discover, not only advertise on Facebook, but they also have offers tied into the many virtual games that are common on the social networking site.
Is there room in the CARD Act for tighter regulations? If there is, one thing is for sure: it’s going to be a slow dance in terms of making those changes.