From NPR News, this is ALL THINGS CONSIDERED. I'm Jennifer Ludden.

Your teen-agers may have finished sending out their college applications by now, but it's likely other applications for them are flooding your mailbox.

Unidentified Teen #1: I'm 17. I'll be turning 18 actually next Tuesday. You know, they'll send you the piece of mail, and there'll be sort of like a credit card type of thing, and it'll say your name on it. Then you'll open it up, and then it'll say, you know, `You've been pre-approved for a credit card. All you have to do is call this number, and we'll send you your card.'

Unidentified Teen #2: I'm 17 years old. Usually I get, like, a white envelope in the mail, and it's usually, like, a pre-approved statement--`look inside' type of thing--say, like, `If you want it, call this number now. You can have this credit card.'

Unidentified Teen #3: I'm in ninth grade. I'm 15. I've gotten these credit card offers. They've all come through the mail with a cool transparent window in the envelope that I like. And it says, `Apply now and you'll get, you know, no fees until' something or another.

LUDDEN: Those are the voices of students at Beaver Country Day School in Chestnut Hill, Massachusetts.

Such offers aren't new. You may remember getting them yourself. But industry analysts say credit card companies and banks are sending them to ever-younger potential customers.

Professor ELIZABETH WARREN (Harvard University): Because they're the last people left who don't already have nine credit cards in their wallets.

LUDDEN: Elizabeth Warren is the Leo Gottlieb professor of law at Harvard University and an expert on contract and bankruptcy law.

Prof. WARREN: Credit cards are incredibly profitable, and so they're looking high and low for anyone who might use a credit card. And most of the people who might use credit cards are already using someone else's credit card. So it's really hard to find new customers.

LUDDEN: Unless those customers are really young. It is not illegal to issue a credit card to a minor, but no bank spokesman we contacted said this is done on purpose.

Ms. NESSA FEDDIS (Senior Federal Counsel, American Bankers Association): I'm not aware of any card issuer who will issue a card to a minor or of any card issuer who is deliberately soliciting minors.

LUDDEN: Nessa Feddis is a senior federal counsel for the American Bankers Association, whose members include many credit card companies.

Ms. FEDDIS: Now it's possible that inadvertently solicitations may get into the hands of minors, but a solicitation is not the same as receiving a card, any more than an application to apply for Harvard means you're going to get into Harvard.

LUDDEN: Feddis says an application sent in by a minor would be checked and rejected. But the credit card industry itself touts minors as a new market. A four-year-old document by Experian, one of the Big Three credit reporting agencies, says this: Quote, "Young adults under 18 years of age are emerging credit customers, particularly those about to graduate from high school and enter the college ranks." Robert Manning is with the Rochester Institute of Technology and the author of "Credit Card Nation."

Mr. ROBERT MANNING (Rochester Institute of Technology; Author, "Credit Card Nation"): What's very clear in our recent statistics is that since about 2000, we've seen a sharp increase in use of credit cards among high school students. And by that, we're referring to people that are in the under-18-years-old category. In our recent study, we've seen that increase about threefold.

LUDDEN: Manning says some of that increase, no doubt, includes credit cards co-signed by teen-agers' parents but not all of it. On its face, it seems to make no sense to issue credit cards to minors without their parents' signature. By law, they're not obligated to repay whatever debt they incur before age 18. But Harvard's Elizabeth Warren says that may not matter.

Prof. WARREN: I mean, look at it from the parents' point of view. If you got a letter that said your child has run up $600 in charges and another couple of hundred dollars in interest rates and fees, and the credit card company can't sue the child, but they can ruin the child's credit rating, a lot of parents are going to dig deep in their pockets and pay it off. And that's what credit card companies count on. It's not the law that makes people do this. It's the heart.

LUDDEN: Nessa Feddis of the American Bankers Association disputes any such notion.

Ms. FEDDIS: Suggesting that the risk associated with giving unsecured credit, like a credit card, to someone who, by law, is not required to pay--that that risk is somehow outweighed by a very questionable assumption that the parent will step in for the child is more than speculative. It's untrue.

LUDDEN: But researcher Robert Manning says there is a track record of credit card companies looking to the parents of cardholders for repayment.

Mr. MANNING: There's a long litany of lawsuits that both the credit card industry has filed against parents and parents have followed in response to debt-collection efforts that they felt they weren't responsible for their children's high levels of credit card debt. So there's very clear evidence that the banking industry recognizes that while they're loaning an--unsecured funds to a young person, that the reality is that they look at the household's ability to bail that person out.

LUDDEN: Manning says there have been suits filed even when parents did co-sign their child's credit card. He cites one case in which the parents told the card company they'd only be responsible for up to $2,000 in purchases, but the bank allowed the child to run up a $10,000 debt, then sued for payment. That case is pending. All this has focused attention on the increasing debt being accumulated by young people. Manning, author of "Credit Card Nation," says when he began researching consumer credit in the early '90s, a common issue was the debt accumulated by graduating college seniors.

Mr. MANNING: In fact, what we're seeing today now is this new phenomenon of incoming college freshmen who already have anywhere from $3,000 to $12,000 in credit card debt and already are one step away from a financial crisis that will force them to drop out of school maybe their freshman or sophomore year.

LUDDEN: And once in college, the age-18-and-over crowd is a well-established target of the credit card industry. Julie Weber is executive director of housing and dining services at American University in Washington, DC.

Ms. JULIE WEBER (Executive Director, Housing and Dining Services, American University, Washington, DC): Someplace along the way credit card companies got a great idea that in order to have college students fill out credit card applications, they would work with a student group--you know, the car club--and they would work out an arrangement with the club. For every credit card application that is filled out, they'd give the club a donation: 25 cents, 50 cents. And for student organizations, who have a difficult time raising money, there's no risk to them. All they do is reserve a table, and the credit card company comes out and solicits the students walking by: `Would you like to fill out a credit card application? No risk. Just fill it out, and we'll give you a water bottle or a T-shirt or a stuffed animal.' And students would fill them out.

LUDDEN: As more young people get credit cards, both critics and industry officials say there's a greater need to teach financial literacy. Kathleen Rizzo Young is with HSBC bank. The company recently launched a campaign on credit awareness, and Young says dozens of HSBC employees go into middle and high school classrooms every year to talk about financial responsibility.

Ms. KATHLEEN RIZZO YOUNG (HSBC Bank): We spend millions of dollars educating young people as to the proper use of credit. We have a Web site called YourCreditCounts that educates people of all ages about using credit wisely, the importance of credit scoring. So this is something that we're very, very committed to as a company.

LUDDEN: Gary Ruskin heads Commercial Alert, a non-profit group concerned about marketing to children and their right to privacy. He suggests young people can try to avoid being solicited for credit cards in the first place by declining to give out personal information.

Mr. GARY RUSKIN (Commercial Alert): For example, don't fill out contest forms, don't put your personal information on Web sites, don't fill out warranty cards unless you're sure that your personal information's not going to be transferred. Don't do point-of-purchase plans. That will definitely help.

LUDDEN: So forego that three-year warranty on the new digital camera you just bought.

Mr. RUSKIN: (Laughs) Unless you're sure that the company isn't going to sell your personal information to everybody who wants to buy it.

LUDDEN: Ruskin would like to ban the sale of personal information of minors. Such a bill stalled in the last Congress but is likely to be introduced again this year. The notion of marketing credit cards to young people seems to turn common sense on its head. It used to be that banks preferred giving credit cards to someone with a steady income who'd already proven they could pay back a loan. Now Nessa Feddis of the American Bankers Association speaks of a democratization of the credit card industry.

Ms. FEDDIS: You need credit cards more than you did years ago. They're used to--you know, if you wanted to rent a car. Credit cards offer enormous convenience, but they're also a very secure way to manage your finances. If you lose your credit card, you haven't lost all your money.

LUDDEN: And teens aren't the only ones who see such benefits. One credit reporting agency cites a study of parents; two-thirds of them thought young people should have a credit card by the time they're 18. Again, Harvard law Professor Elizabeth Warren.

Prof. WARREN: It's a remarkable notion and terrific marketing, I should say, from the credit card companies that we have come to see the credit card as essential, you know, right up there with inoculations and getting yourself educated.

LUDDEN: Warren worries about the effect of this and, in fact, so do some of the kids.

Unidentified Teen #4: I see no purpose in having a credit card with no limit. I mean, personally, when I get older and I have kids, I'm not going to give my 17-year-old son a credit card with no limit. I mean, he's going to go nuts.

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LUDDEN: This piece was produced by Kim Kokich, with additional reporting by Andrea Shea in Boston.

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