Credit card abuse puts students at risk

Black Collegian, Oct 1999 by Parks, Charanne

What could be more important than your grade point average in determining your opportunities after college? Your crdit report. This report provides information on how you have handled credit in your life, and helps provide potential creditors with information they will use to make their credit-granting decisions. With a negative credit history; it could be nearly impossible for you to rent an apartment, buy a house or car and most importantly-it could prevent you from obtaining your dream job. So how do you develop and maintain a good credit history? By handling credit responsibly, especially your credit cards. Credit cards. It is nearly impossible to function in today's society without one. From making airline, car or hotel reservations, to making purchases on the Internet, it is the one essential that makes everyday living easier. And credit card companies are trying to make it easier to get one.

Competition for credit card customers has become extremely intense. Companies are looking for whatever customers they can get, wherever they can get them. Frequently this brings credit card marketers to campus eager to sign up 'fresh meat.' They expand their market by signing up new card members, many of whom are barely 18 years old. By signing up more customers earlier, the card companies hope to establish a type of brand loyalty that will carry far into the future.

What better place to start than a college campus? Each year there is a guaranteed new crop of potential customers. ln the next few months, students everywhere will be offered free T-shirts, water bottles, long distance, pizza discounts, Frisbees, backpacks, hats, pens-you name it-all in the name of marketing credit cards. However, if many college administrators have their way, these marketers will soon be a thing of the past--along with those annoying little credit card mailers that are stuffed in the bottom of your bag at the campus bookstore.

Several universities have eliminated credit card marketing from their campuses altogether. University of Wisconsin-Madison and Lehigh University in Pennsylvania have both banned marketers. At the University of Iowa, credit card marketing is a large problem on campus due to the volume of requests they receive. Dr. Phillip Jones, vice president for Student Services and dean of students for the University, indicates that "the marketers must be sponsored by a student organization and student organizations use the marketers as fund-raising activities." According to Dr. Jones, The University of Iowa recently turned down funding from a marketer who wanted to put credit card applications in the bags used by the bookstore "because we want to find ways to stop the proliferation of credit card applications on campus."

In March of this year, the United States House of Representatives introduced H.R.900, the Consumer Credit Card Protection Amendments of 1999. Section 7 of this bill addresses the issuance of credit cards to underage consumers. One of the goals is to prevent credit cards from being issued to a consumer under age 21 without proof of independent income to repay the debt or the signature of a parent or guardian, similar to a cosigner on a loan.

As it stands now, many credit cards are issued to students with no proof of income. In general, all students need to do is provide proof that they are a full-time student and they will receive a card. A student can get a card on his or her way between classes. Need a VISA card? They will sign you up in the student center. Want a MasterCard? You can pick one up on your way to chemistry. But, do you ever consider how this easy credit is going to get paid? Not usually. You reason that you have a part-time job, and will only use the card for "real" emergencies-like books or if you suddenly need to go home.

You may even say to yourself that you will pay the bill as soon as it comes in. When it arrives, it lists the total amount you owe, and you almost fall over when you see how often your promise of 'just this once' turned into a bit of a spending spree. As you are wondering for the first time how you are going to pay for this, your eyes catch the little box that shows "minimum payment of $20." "$20?! That's it?" So you send in that minimum monthly payment-for every card you have managed to obtain in the last three years, and figure as long as you are making the minimum payment, you figure you are doing okay.

However, according to bankrate.com, if you have a $1,000 balance on a credit card with 18 percent interest, and you me-rely pay the minimum balance every month, it could take you over 12 years to pay off this debt. And what did you buy with that $1,000 debt you racked up? Did you really use it for books? Was it the latest CDs? Or may-be that outfit you just had to have? Or was it the last-minute Spring Break getaway? Think about it the next time you are tempted: do you really want to spend the next 12 years paying for a $15 CD or $40 sweater?

According to a study released earlier this year by the Consumer Federation of America, expanding credit card debt is quickly becoming one of the most severe threats to academic success on college campuses. This study, conducted by sociologist Dr. Robert Manning, a visiting professor at Georgetown University, suggests that credit card marketing "on college campuses poses a greater threat than alcohol or sexually transmitted diseases."