Up to five times a month, credit card companies shell out $200 a day to market credit in Radford University’s Heth Plaza. Students who fill out credit applications get to choose from gifts such as sunglasses or T-shirts.

A credit card symbolizes freedom and financial independence. But with this plastic buyer’s license comes responsibilities that may be too much to handle. The average undergraduate has a credit card debt of $2,000 while one fifth of undergrads owe more than $10,000, according to a 1999 study from the Consumer Federation of America.

“Credit card companies are very aggressive with their marketing,” Sally Cox, RU’s event planning manager, said. Credit card brochures are pinned to bulletin boards throughout campus despite university policy that forbids it. Credit card companies will award credit cards to students without jobs or income, according to state Public Interest Research Groups (PIRG). This offer is not available to other consumers.

“I firmly believe that credit card companies give them to the students because they know their parents will pay,” Martha Sells, who works for Consumer Credit Counseling of Southwestern Virginia Inc., said. Sells counseled one student who came to her in tears over a $3,000 debt. The student's free gift? A highlighter pen.

Sells said she counsels seven new people a day, many of whom are students from Radford University and Virginia Tech.

On her desk sits a fishbowl filled with shredded credit cards. “We have enough of those to fill up a car,” she said. The bowl serves merely as a desk ornament. She pulls a box full of cut cards from behind her desk and shakes it. “That’s just from this month,” she said. According to Sells, college students are especially targeted by credit card companies.

“Freshman year they’re approached on campus with a free gift and now in senior year they’re ten to fifteen thousand dollars in debt and they don’t have their first real job yet,” she said. “It becomes a real surprise because it’ll take five to ten years to get out of debt.”

An 18 percent annual percentage rate can make even a low credit card balance menacing, Sells said. For example, with the minimum monthly payments of two percent, a balance of $1,750 would take 28 years to pay off with more than $4,000 in interest. The damage can increase if fees and interest rate hikes are applied for late payments. The aggressive marketing of credit cards on campuses has caught the attention of Rep. Louise Slaughter (D-NY). On Jan. 9, she introduced a bill to amend the Consumer Credit Protection Act to “prevent credit card issuers from taking unfair advantage of full-time, traditional-aged, college students.”

The legislation aims to limit credit lines to 20 percent of a student’s annual income without a co-signer. It would require parents to agree in writing to credit limit increases for cards they co-signed. It would prohibit more than one credit card account for students without independent income. The bill also seeks to eliminate the hard-to-read fine print in credit card agreements, where fees and penalties are often hidden. While legislation can help protect students, Sells stressed the importance of financial education. Radford University addresses the issue of credit in its UNIV 100 course and Quest orientation program for new students. Some universities have implemented credit counseling and education programs.

“If they allow [the credit card vendors] to come on campus, then they should provide education,” she said.

Sells urges students with a low income to avoid getting a credit card altogether. She suggests the use of a debit card instead. Debit cards draw money directly from an account, similar to writing checks. As for students who already have cards, she said to ask for help before becoming “mega bucks” in debt.

PIRG gives advice for students considering the world of credit. First, students should shop around and be wary of “sleazy” teaser rate deals. Students should stick with one card and pay off the full balance every month, on time. Late payments can harm a student’s credit rating which can negatively affect future employment opportunities. Consumer Credit Counseling offers free monthly classes on money and budget management at its offices in Christiansburg. For more information, call 1-800-926-0042.

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Comments:
one point I should also mention is that every card you apply for appears on your credit record. You may look back years from now on a card you picked up at RU and never used. It's amazing, but they never forget.

Name: Jeff
Comments:
I agree with Norm, Jenn, Shaun and Brian. Watch out for those people. They're stuck in the daddysgonnapayforyourcrashedcar frame of mind. Also, if you are able to pay the entire balance, it speeds you up on the road to good credit. But, like Norm said, send in at least the minimum balance, and early.

Name: Jenn
Year: Senior
Comments:
A credit card CAN be a good thing to have. I have one that I use only when I need to. I'm glad I have it because I was stuck at KCI airport overnight during the winter break and if I didn't have a credit card I might not have been able to pay for a hotel room. I try to pay the minimum balance every month and I don't go on shopping sprees just because I have a card so hopefully I won't get myself in too bad of a debt.

Name: norm
Comments:
Yep. Good stuff. Also look at it like this - if you're a student chances are you're already in debt for all your student loans. Think about that when you're running up those cards. It all adds up. Plus if you have a car loan, that counts against you.

But besides the amount of debt, the most important thing that affects your credit rating is paying on time. Even if it's the minimum every month, send it in early.

Name: shaun
Year: senior citizen
Major: english
Comments:
Good article Dave. I haven't signed up for a credit card yet, and I'm sure I will one day. But for now...no. Debt is not something I need right now.

Name: Brian Korte
Major: ly bored right now
Comments:
Excellent reporting, Dave. Very informative article. Credit cards (if used improperly) can be more dangerous for college students than any other age group. Starting off with bad financial habits can cripple a future easily. Those t-shirts don't look so appealing after you look at a pile of them on your floor and realize that you're stuck wearing them for life.

Again, great reporting Dave.