Young Americans are inundated with credit card offers and many of them are barely treading the water of the resulting debt. College students in their final year carry an average of $2,864 on their cards, according to data from student loan giant Nellie Mae. Graduate students, on average, carry more than three times as much. At least one major credit card issuer has made new student accounts 25% of its annual new card goal, according to author Anya Kamenetz. And students aren’t the only ones building mountains of high-interest debt at an early age.
What is the research about?
This brief looks at consolidation loans for credit card debt. Consolidation loans are popular at social lending sites like Prosper, LendingClub, and Zopa, which are growing rapidly. Interest rates on credit cards, which often range from 15% to 30% APR for young borrowers, provide a fruitful opportunities for credit unions to offer lower-rate debt consolidation loans and gain competitive advantage by becoming a trusted financial partner for young consumers.
What are the credit union implications?
Consolidation loans can be particularly valuable to young members with large outstanding debt, but their potential success is not limited only to young adults. Credit unions can attract new young members with these products.
This report is sponsored by PSCU Financial Services, the Credit Union Executives Society (CUES), Fiserv, and the Corporate Credit Union Network.