Can a Major Credit Card Issuer Really Educate Consumers about Responsible Card Usage?

Written by CardRatings.com
Posted On: February 7, 2006

When it comes to financial success, credit health is a key component; and lots of education is critical in helping the next generation start down the path of responsible credit card usage. We can never have too much credit card education, and it’s helpful if it comes from many different angles including parents, teachers, and even credit card companies.

I am always encouraged when members of the credit card industry take a proactive and purposeful role in researching trends and then taking steps to help educate America’s youth. Although such efforts are sometimes more lip service than anything, some organizations put their money where their mouth is. One such organization is Citigroup, who has made a 10-year, $200 million commitment to financial education.

In January 2005, along with Harris Interactive, Citi conducted its second annual survey of college upperclassmen financial literacy. The survey of 1,060 U.S. college juniors and seniors at a 4-year college or university revealed that while education efforts are certainly on the right track, much more is still needed to be done.

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"Though students are extremely optimistic,” reported a Citigroup press release in March 2005, “survey results show a significant disconnect between perceived and real credit knowledge, and that credit education is still needed.”

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Simply put, students need help in taking their head knowledge of credit and actually applying it to everyday life. Though 90% of college upperclassmen say an important financial goal is good credit, still…

• 72% have not requested their credit report, which is now available for free at AnnualCreditReport.com.
• 32% have either missed or been late with a credit card payment.
• 22% think using a debit card helps build credit history.
• 52% don’t believe today’s spending habits affect tomorrow’s credit worthiness.
• 28% don’t save money for purchases they can’t afford today.
• 37% don’t realize opening unnecessary, new credit cards will lower their credit score.

In response to the continuing need of credit education, in 2005 Citi proved their dedication to making sure continued education efforts actually happen—both at the high school and college levels.

High School

In 2005, for the second year in a row, Citibank and their Credit-ED program (http://www.students.usecreditwisely.com) sponsored the Center for Student Credit Card Education's (CSCCE) financial education primer “The ABC’s of Credit Card Finance.” The program includes a lesson book for students, training guide and PowerPoint presentation to help teachers facilitate classroom lessons, as well as an informative letter for parents.

In a Citigroup March 10, 2005 press release, founder of CSCCE Carol Carolan, Ph.D. noted:

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“We felt it was important to reach students in high school before they go off to college. Some high school students lacked critical financial information and were confused about how to use credit once they arrived on college campuses. By partnering with Citibank’s Credit-Ed program and creating the ‘ABCs of Credit Card Finance,’ we’re reaching students at a critical age. We’re pleased at the overwhelmingly positive response we’ve received from students, parents and educators nationwide.”

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In 2005 across 50 states, 460,000 high school students using the ABC primer learned credit basics including credit card terms, credit reports, credit scores, responsible credit card usage, preventing fraud, creating a budget and choosing a credit card suited for individual needs.

Citi’s Credit-Ed Program also teamed up with the global children’s publishing and media company Scholastic to award seventeen college scholarships to winners of the annual Citi/Scholastic National Essay Contest. High School juniors and seniors submitted 500-word essays answering the question “In what ways does money and the act of saving money present a challenge to today’s youth?” Grand Prize Winners were awarded $15,000, second place $ 1,500, and third place $200.

Finally, Citigroup is committed to training employees to teach financial education and then allowing them to take a day off from work to volunteer for non-profit organizations in their communities. Citigroup reported in their Financial Education Program Highlights for December 2005 that more than 3,038 employees and non-profit partner staff had gone through training to teach the Citigroup Financial Education Curriculum. In October 20th, 2005 this initiative paid off as Citigroup employees across the country volunteered to teach credit dos and don’ts to high school students.

College

To meet the needs of 10.4 million college students across the country, on August 31st Citi launched their Credit-Ed Challenge. It’s a one hour, interactive, free financial education workshop delivered to campuses across the country and available online at http://www.studen ts.usecreditwisely.com. The material teaches college students about the importance of a good credit history, how to use credit wisely, and how to budget.

The Credit-Ed Challenge received strong support from Rosella Bannister, Manager, Jump$tart Personal Finance Clearinghouse and Director Emeritus of Consumer Education at Eastern Michigan University:

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“College students will like the Credit-Ed Challenge—it cuts to the chase on credit card issues that students need to know. A nice package bundled into a one-hour workshop—this learning experience promises to make a significant difference in the lifelong financial well-being of college students.”

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Educating the next generation truly takes a collaborative effort between parents, schools, and organizations dedicated to the financial health of tomorrow’s leaders. I look forward to watching what unfolds in 2006 and am excited about the role CardRatings.com is playing in credit education.

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