By George Thomas
CBN News Reporter

It was 50 years ago this August when credit cards were first introduced in the U.S.

CBN.com - OKLAHOMA CITY — It was 50 years ago this August when credit cards were first introduced in the United States. Today 157 million Americans have an average of ten credit cards, and sixty percent of those carry an average monthly balance of $8,000.

That is good news for the credit card industry which has seen its profits soar in recent years, but it is bad news for the millions of borrowers who are unable to meet their obligations.

And increasingly young people, especially students, are the ones getting hooked on America's "charge now, pay later" habit, often with devastating consequences. The urge to spend, and spend on credit, has many young people charging into trouble. Consumer advocates and parents say the credit industry is helping to push young people to the financial brink.

College Student Mindy Pace explained how she first got hooked on credit. "Minimum payments $20 here, $20 there — it didn’t seem a lot to me," she said. Soon she was spending regularly at The Limited, Express, Victoria’s Secret, Lane Bryant, and other stores.

College campuses are a big target for the purveyors of credit. "I get them all the time, new pre-approved credit card applications," said one student.

Credit card issuers wait, with application in hand, to sign up new recruits.

"It would be easy to get five or six in one day," a student explained, noting that no job or income are required. The companies merely require students to list their college tuition as their income.

Consumer Advocates say marketers are using aggressive tactics to make their products more appealing and available to students.

"Particularly on college campuses, the marketing has gone overboard. You get a free T-shirt, applications for credit cards are all over campus... credit card companies are trying to give you a gift and sell you a credit card. It's become a serious problem," said Travis Plunkett of the Consumer Federation of America.

But the pitch apparently works. In fact, 70 percent of undergraduates have at least one credit card. Graduate students have an average of seven.

"Credit is more available to young people today than ever before, and the industry does view it as a new emerging market," said Samuel Gerdano of the American Bankruptcy Institute.

Some of America's largest universities even allow credit card solicitations in exchange for lucrative fees. In some cases, a school receives a cut of student's purchases. In return, college officials sign a contract giving a card company the exclusive rights to market its products on campus.

"That's part of the aggressive marketing of credit," Gerdano explained.

But the aggressive targeting of students and the payoffs for the schools have left some parents angry and others heartbroken.

"The universities have absolutely no business making money off the stupidity of their students," said Janne O'Donnell.

O’Donnell remembers the day she took her son Sean Moyer to college. "There was a table, T-shirts and credit cards, sign up for a credit card and get a free T-shirt," she said.

Within weeks, Moyer had his first credit card.

"I wish he would have thought about what he was doing. [I wish he would have thought], 'Wait a minute, I can't live the life that my parents live at 18, I have to wait, I have to earn these things.' He didn’t do that," she said.

Months later, Moyer, a National Merit Scholar, had racked-up more than $10,000 in debt. In desperation, he committed suicide. He was only 22.

"After he died, we were going through his things and I find 12 credit cards, I find a Saks Fifth Avenue, a Nieman Marcus, three Visas and a Master Card," O’Donnell said. "It did not occur to me that a college student, making minimum wage could have that much credit, that many credit cards. It was just out of the realm of experience."

O'Donnell blames the debt and aggressive credit card marketing for her son's death.

"I have no problems with people having credit cards if the amount of credit is based on the reasonable assumption that you can pay it back. But you don't give a $100,000 credit limit to people on minimum wage, you don't give students five or six credit cards because you think that they are going to be able to pay if off sometime," she said.

Parents like Trisha Johnson could not agree more. In fact, she has even compared the marketing by credit card companies with that of tobacco industry.

"Just like cigarettes, you start smoking them, then you are hooked, you are there and are going to keep buying the cigarettes," she said. "They get you into credit cards, you are going to keep using the credit card or get another one and use it or transfer over and use it, and when you are hooked you are hooked for several years and it will take years to pay off."

Johnson's daughter, Mitzi Pool, was sucked into a credit card lifestyle. Pool charged almost $3,000 on credit cards she got at the University of Central Oklahoma.

"It's not a lot. But to an 18-year-old it’s a lot," Johnson said.

Facing a mountain of debt and no steady income, Pool hanged herself with a bed sheet in her dorm room, her checkbook and bills spread out on her bed.

But the banking industry says stories like Sean Moyer's and Mitzi Pool's are the exception. The industry points to their own research that shows most students use credit responsibly. The credit card industry says the marketing is not aggressive and further defend their actions as sound business practice.

"There are thousands of credit card issuers and that benefits the consumer. This means that prices are lower, this means that interest rates change all the time depending on how you are being marketed to, it means that you can get the product and service that you like," said Catherine Pulley of the American Bankers Association.

Pulley says that 18 year olds are savvy shoppers and can manage their own finances. But research shows a growing number of students are flunking Credit 101.

The average credit card debt for students has increased since 1998. Ten percent owe $7,000 or more. One fifth carry a balance of $10,000 and greater. Add to that the staggering cost of college, and many are pushed to the financial edge.

"College administrators are telling us that they are worried about credit card problems more than they are about other problems that drive kids out of school," Plunkett said.

And for a record number of students, bankruptcy has become a first resort rather than a last.

"Bankruptcies among the very young have increased four-fold in the last five years. Last year, about 150,000 people between the ages of 18 and 25 declared bankruptcy," Plunkett said.

Experts say bad financial decisions at a young age can have severe repercussions later in life.

"When they are ready to make a major purchase, ready to start a family, ready to buy a home, the array of life choices will be truncated if there are bad choices made early on," Gerdano said.

Congress has proposed legislation that bans or limits the marketing of credit to students. Further proposals would prohibit those under 21 from getting their own credit card, and 18 states are considering initiatives to limit the access of card companies to college campuses.

But until then, this multi-billion dollar industry, with its glossy ads and mailings, is not likely to stop hawking its products to America's youth anytime soon.

In fact, they did not even stop after Mitzi had passed away. "The last one that I received was six months ago, three years after her death — ‘pre-approved Mitzi Pool,’" her mother said.