Caveat creditee: let the borrower beware

Because of the many problems students often have with credit cards, and because of the on-campus marketing strategies that cloud reasoned decision-making skills, we believe the Office of Student Activities needs to stop granting permission to credit card companies to solicit and sign up students on campus.
Companies that want to set up tables around campus only need the sponsorship of an official student organization. Then, all around campus, at tables full of t-shirts, squeeze bottles and giant KitKat bars, students flash an ID, sign the bottom line and start for the Mall of America with what feels like $800 of free money.
According to an article in the New York Times, 80 percent of college students have at least one major credit card in their name. Card companies seek out students because studies show young people are very loyal to their first credit card. They tend to keep it longer, maintain a higher month-to-month balance and reach for it first among the numerous shiny cards in their wallets. That loyalty is repayment for the “trust” bestowed by the credit card company on someone new to the grown-up world of credit.
But because of meager incomes or ignorance about finance charges, most students don’t use their cards wisely — that is, pay off all debts every month. There are few sources that specifically track the credit use of American college students. A recent study at Mississippi State University found that the average student credit card balance was $1,249.25. Of those who used credit cards, more then 70 percent kept a revolving, or month-to-month, balance. At 18 percent interest (a typical rate for on-campus student offers), those who only make the 2 percent minimum monthly payment would spend 16 years and 3 months paying off that amount. Moreover, they would have to pay an additional $2,146 in interest.
Credit card companies claim they are doing a service to young people by giving them an opportunity to establish a so-called “good” credit rating. Far too often, students stumble after signing up for numerous accounts and then find out they don’t have enough income to cover minimum payments. Instead of establishing good credit, they catch the seven-year “bad” credit plague that may eventually cost them a car or house loan or even a job. Charger be warned. Prospective employers have begun screening out applicants with a history of bad credit.
We can’t discount the benefits of responsible credit card use. Product insurance, cashless wallets and the means of making emergency purchases are all valuable assets that credit affords. However, if students want a credit card, they should put time into making a thoughtful decision: consult friends and family and examine the fine print on issues like interest rates, annual fees, terms on advances, late fees and other charges.
The decisions involved in applying for a credit card are much more complicated than just choosing between plain or peanut M&Ms. And a rest stop along the Washington Avenue Bridge while walking between classes isn’t the right time or place to make a reasoned, responsible decision. We want this kind of marketing stopped.