Credit cards too tempting for students

Easy access to credit cards is giving financially-illiterate students the ability to play with fire.

"Taiwanese students are unfamiliar with credit management ... yet they can apply for credit cards without proof of income or parental approval," said Tseng Yen-fen (曾嬿芬), a sociology professor at National Taiwan University.

And with schools and curb-side marketers both promoting cards, access is readily available.

"There are lots of credit card sign-up booths on the streets," Tseng said. "And the booths use youth-orientated freebies to attract students."

Cartoon characters such as Hello Kitty and Betty Bop are on the front line of promoters' sign-up sellers.

Tseng said that sudents' lack of familiarity with credit management could lead them to charge beyond what they can afford.

"If students pay only the minimum every month, they can start digging a [financial] hole at a young age," Tseng said.

According to a Taiwan credit-card market study, credit-card issuers bank on young people's inability to pay.

"Because most card companies don't charge an annual fee, making money means getting students who can't pay the bill," said Annabel Lee (李思儀), a graduate student at NTU's sociology department, and researcher behind the study.

Lee said that another tactic is to encourage excessive card transactions by offering bonus money or gifts for multiple usage.

The spending habits of Taiwan students are definitely changing.

"Good saving habits are very popular among the middle-age generation, however, the younger generation is more likely to spend without thinking," said Cheng Tung-shen, (陳東升), chairman of sociology department at NTU.

According to statistics released in April by the Cabinet-level Directorate General of Budget, Accounting and Statistics, the national savings rate in 2000 was 25.2 percent, down from 26.7 percent in 1996 and 29.4 percent in 1991.

The use of plastic credit is on the rise, with total annual credit-card spending hitting NT$719.8 billion in 2000 -- an increase of 20.1 percent over 1999.

Peer pressure may also be a factor.

"Just like other teenagers, they want trendy things ... and they want a card to show off their economic independence," said Huang, Hen-chiang (黃恆獎), a professor in the international business department at NTU.

The distribution of student credit cards is only monitored by the Bankers Association.

"We have demanded that the government enforce stricter regulations on student credit-card issuances, and banks or schools should educate students on the importance of sound credit management," said attorney Joann Su (蘇錦霞), a member of the Consumers' Foundation.