Newspaper Page Text
page 11
March 23, 1978 Maroon Tiger
Getting it on with A Deck of Credit Cards:
Who Deals the College Cro wd?
Interest
(First in a four-part series on credit for young consumers;
by CAROL PINE For National Car Rental Systems, Inc.
The bronze, 18-year-old beach-god strolls into his local jock shop, picks
out the Cadillac of surfboards and pays for it with a personal credit card.
The teenage girl with a steady paper route and stunning sincerity
secures a local bank loan for a new, ten-speed bike.
Three young college graduates have a yen to sell jeans in their own
retail shop. No experience, but lots of energy. They convince a local bank
to advance them $5,000 to start the venture.
While credit was once the exclusive privilege of well-to-do, mature
Americans, the consumer picture has changed dramatically. Consumers
over 50 remember a cash-on-the-barrelhead society when nothing was
theirs until they could pay for it. In full.
But no more. Today’s consumers buy now and pay later. Our affluent
society has become the credit society. We know that we can flash a few
plastic rectangles embossed with meaningful numbers and gain instant
consumer acceptance. We are not in the mainstream until we have at
least one installment loan. Buying with cash in the seventies, Time
magazine recently pointed out, seems as outmoded as the crewcut.
The variety of goods and services available on credit is astounding. Of
course, there are the traditional items such as cars, homes, clothes, ap
pliances, furniture, food and airline tickets. But a person can also rent a
Los Angeles apartment, or rent a car, or buy ski-lift tickets in Aspen on
credit. He can buy taxi rides on credit and finance veterinary services for
his ailing terrier on credit. If he’s a culture buff, he can buy original pain
tings and sculptures on credit. He can even charge his annual church
donations or enroll in a college evening course on credit.
No wonder some people collect credit cards like they once collected
baseball cards. The plastic rectangles stamped Master Charge,
American Express, Amoco, and Visa are just as good as currency.
Sometimes better. National Car Rental System, Inc. Credit Card
Manager Connie Conradi says the average middle-class American has
12.8 credit cards, but there is also the extreme example: Walter Cavanagh
is reportedly the most avid credit card collector in the country. Earlier
this year, Cavanagh, a pharmacist who earns about $27,000 a year, said
he owned approximately 800 credit cards. Cavanagh apparently collects
them for fun and routinely stores all but a few in a safe-deposit box. If
Cavanagh actively used his 800-plus cards, however, he would have an
estimated line of credit approaching $9.3 million in a single month.
In some ways, to avoid buying on credit seems, somehow, un-
American. Certainly, if we bought goods and services strictly with cash,
the economy would be slowed down considerably. But it is not all
patriotism and consumer conditioning that leads us to buy on credit. In
flation, coupled with recession in recent years, has made living tough for
everyone. No wonder young married couples are scrambling to buy
homes—not because homes are a bargain. Far from it. They’re scram
bling because the $50,000 home they admired this year will cost an es
timated $75,000 by 1981.
The conditions and statistics speak clearly. Time magazine reported in
February that the U.S. population had grown 44 percent since 1950, but
the total amount of outstanding consumer installment debt multiplied
more than 12 times to roughly $179 billion (that figure, by the way, does
not even include home mortgage debt.) We are truly a credit society and
young adults are the people who depend on credit most. “Their wants and
needs exceed their income,” says Ronald McCauley of the Chicago
Federal Trade Commission regional office. “For the first half of a
person’s life, he has more time than money ... and in the second half, it s
the complete opposite.”
But there is frustration among young consumers. They watch their
parents buy on credit, so they try to do the same. They have more money
than their parents did thirty years ago and they choose to spend it—at
last count, about half of all 16-to-21 -year-old Americans had jobs. Modest
jobs like babysitting and cutting lawns, to be sure, but jobs just the same.
The jobs plant up to $20 a week in the pocket of typical 17-year-olds.
With money like that to spend, young people are rapidly lured into the
credit world. There are junior charge accounts and student charge ac
counts available sometimes for consumers as young as 12. There are
“campus deb accounts” and “keen teen accounts”. By the time he reaches
college, that young consumer is included in the majority if he already
holds at least a department store credit card.
After studying the success of its young credit card test program for 18
months, Master Charge in Florida reports that among all youthful ap
plicants with an accepted co-signer, 80 percent have been approved, the
average line of credit is $301 per person and the average balance for
young people with Master Charge cards turns out to be a respectable
$134.
National Car Rental agrees that most people under 24 are not bad
credit risks. The company also points out that if a young person already
has a Master Charge card or other major credit card, it’s easy to rent a car
from National.
“Like Master Charge,” says Matt Waters, director of credit for
National Car Rental, “we want to give young adults the credit they
deserve.” National has rental offices located in a number of major college
towns and rents to students on a cash basis with a cash deposit in ad
vance, provided the person passes the credit qualification procedure.
However, the firm much prefers to rent to students who carry one of the
major credit cards.
But there can be credit problems caused largely by lack of experience.
An 18-year-old college student in Arizona, for example, was turned down
for a credit card because he was already “overburdened with debt . A
Colgate student who had been using his father’s oil company credit card
by agreement ran up a $200 gas bill and was forced to sell his car. Critics
of young consumer credit who really want to get tough remind us of the
student loans that will never be paid off—to be specific, the federal
government cites $500 million in loans that are in default. That’s 10
percent of all student loans issued. By next year it is estimated that an ad
ditional 145,000 student default claims worth $127 million will be filed.
WE'D UK£ TO
RENT A 5UBCOMRACT
Blacks Fall in Employment
by MELBA LEMIEUX
A survey of the job situation
for Black Americans over the
past decade paints a dismal
background of joblessness and
discrimination. This has
resulted despite government
affirmative action programs
and periods of prosperity.
Economist Robert Brown,
founder of the Black Economic
Research Council, suggests
that Blacks have repeatedly
been manipulated into the
“effect” positon of the
economic picture, instead of
taking their rightful places
among the throngs of whites in
the labor force who constitute
its “causes”. This
manipulation is placing
Blacks further into unem
ployment, forcing them to lose
faith in hopes of better op
portunities even when
economic times are going well.
“For many years, the Black
employment rate has hovered
at approximately twice that of
whites. This two-to-one ratio
declines slightly during
periods of prosperity and rises
somewhat during years of
recession. In recent years,
however, this ratio has tended
to remain above two-to-one
fairly consistently. From
November 1976 to November
1977, Black unemployment ac-
Over Past Decade
tuallv rose, whereas white em
ployment fell substantially
over the same period." states
Brown.
EEOC “Chair” Eleanor
Holmes Norton agrees that
there is foul play involved in
the reasons for Black unem
ployment. She attests that
“The economy is doing tremen
dously for white people. The
question must be asked: Why
are our unemployment rates
going up at the same time?
Ms. Norton blames the
concentration of Blacks in
“unemployment-prone” in
dustries as one of the reasons
for the rise in Black unem
ployment. This concentration
of Blacks is what economists
have termed the “dual labor
market.”
The theory of the “dual labor
market” deals primarily with
the covert discrimination
against Black workers who are
fully skilled and qualified for
various jobs, but are denied
access to many “good jobs”
and relegated to “dead-end-
jobs” (in unemployment-prone
industries).
Saul Hoffman authored a
paper discussing the “dual
labor market” while a member
of the Survey Research Center
of the University of Michigan
He gave a definition of “good
jobs” as being those which
provide stable employment
good wages, and more irr
portantl.v. an opportunity to
learn new skills and ever
tuallv obtain better jobs.
Those jobs which he con
sidered “dead-end-jobs" in
eluded “dishwashing, casual
labor and some non-unionized
blue collar work with neithe
high wages, stable em
ployment. nor any real op
portunit.v to learn job skills."
Discussions hv Brown
Norton and Hoffman on the
economic status of Black
Americans appears in the
March/April issue of THE
BLACK COLLET. AN
Magazine, its annual Jo'-is is
sue.
The Jobs issue tells when
the jobs are and how to get
them. Of particular interest is
the Job Index which is a listing
of over 150 companies wit!
jobs available and who to con
tact *by name and address.
You can obtain a copy of the
issue by sending $1.25 to TH
BLACK COLLEGIAN
Magazine, 3217 Martin Luther
King Jr. Blvd., New Orleans
LA 70125.