As recently reported over at BusinessWeek, credit card companies have long-standing relationships with most of the major colleges and universities in the U.S. What better place to prey on naive young people then where they traditionally congregate? (Of course, that's not to say that they are age-biased in any way—older people are oftentimes just as naive when it comes to financial knowledge.)

Credit cards companies have long practiced partnering up with organizations in order to better acquire and target potential consumers. At the forefront of this practice is Bank of America, which has over 700 affinity deals. All those credit cards you see with your school's/former school's mascot on it? It's probably a Bank of America card. For the ability to better target portential cardholders banks and credit card companies usually pay the schools annual fees as well as per-cardholder fees (with other fees sometimes added in depending on the school's negotiating skills).
 

At the University of Michigan, where the alumni association has a contract with Bank of America, the group gets 0.5% of purchases made on school-branded cards. In addition, the organization receives $6 a year for every active student account, vs. $5 for each alumnus account. The deal guarantees the Michigan alumni association $25.5 million over 11 years. The group says its card is aimed primarily at alumni and sports fans but maintains that undergrads are treated fairly. BofA "views student accounts as an investment in developing long-term profitable alumni accounts," says Jerry Sigler, the association's chief financial officer.

Great deal huh? In this way the credit card companies acquire new cardholders (and thus more potential for profit), and the schools get money as well. It's quite the mutually beneficial relationship, based totally on financial gain of course.

Read more about it over at BusinessWeek: The College Credit Card Hustle.

Related post: Beware: Credit Card Pimps.