Protecting yourself

Student credit card bribery

Emily Crone

I graduated from the University of Texas in May 2007. During those four years, I can’t tell you how many times I saw students on their way to class being bribed by vendors to sign up for a credit card in exchange for a slice of pizza or an oversized T-shirt. To me, it seemed moronic to become financially obligated in such a serious way just for some free greasy food or cheapo merchandise, but it appears that many students have fallen for these tricks.

Free stuff now, pain in the butt later
Those who unnecessarily sign up for student credit cards often end up struggling, especially because those cards carry higher interest rates than any other type of credit card and gargantuan penalty fees.

The Student Public Interest Research Groups (a branch of the U.S. PIRG) has a section on its Web site dedicated to credit education for college students. It describes the problems associated with students being targeted for credit cards and outlines its campaign to end this practice. It also has a great resource section, which says that 71 percent ofyoung adult cardholders do not pay off their balance in full each monthcompared to 55 percent of all cardholders. Additionally, college students’ credit card  balances have risen 134 percent in the last ten years.

A lack of education at school
A survey by Nellie Mae (a Sallie Mae student loan company) published in 2007 covered the issues of graduate students and credit cards. In 2006, 92 percent of graduate students had at least one credit card. Of that group, 67 percent said they took out their first credit card as an undergraduate student. Most importantly, 93 percent said they would have liked more information on financial management topics before they started school.

Because of the lack of education about credit, certain states are instituting laws that will deny banks and credit card issuers the right to use gift-giving tactics on campuses. Beginning in January of 2008, California passed a bill called the College Student Credit Card Protection Act, which prevents credit card issuers from enticing students with food, clothes and other gifts in order to get them to sign up. The bill also requires companies to fully disclose information about deals they make with colleges and universities.

We’re not safe yet
The sneaky financial companies are finding ways to get around the rules. The University of Illinois at Chicago prohibits credit card companies from marketing on campus. A Chicago Tribute article says that recently, coupons for a free Subway sandwich were being passed out all over campus. But when the students took the coupons to the Subway, a credit card rep was waiting for them and said they could only redeem the sandwich if they signed up for a credit card. They were able to bring the students from campus to an off-campus eatery, bypassing the school’s rules.

The same thing happened at Ohio State, but with burritos and sandwiches. The Ohio Attorney General is actually suing CitiBank (the bank involved) and the two restaurants that participated because the companies violated Ohio’s Consumer Sales Practices Act. The main violation was that the sign-up stipulation allegedly wasn’t disclosed in advertisements.

The U.S. Public Interest Research Group is leading a project for the next 18 months to educate students about credit cards and to encourage colleges to prohibit credit card marketing on campus, increase financial education and block financial companies’ access to student lists. I sincerely hope that their work will help eliminate these sneaky practices that get many students in serious trouble, and allow coeds to be wiser when making such important decisions.

If you are a college student, please don’t be tempted enough by an offer for a free gym bag or taco to sign up for a credit card. Credit cards are serious business and can easily throw your life out of control if you don’t know how to use them responsibly. If you are considering getting a student credit card, it’s wisest to visit your local bank and talk about your needs with a personal banker. They will help you understand financial literacy much better than free garb will.

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