Too Young to Handle Credit?
Congress should consider legislation that would regulate credit card issuers' marketing tactics on college campuses, Rep. Carolyn B. Maloney (D-NY), chairman of the Financial Institutions and Consumer Credit Subcommittee, said during a meeting she convened on the topic Thursday.
"Students want and often need credit, but may not realize all the consequences of applying for or getting a credit card," she said.
A number of witnesses, including a college student and a representative from New York State Attorney General Andrew Cuomo's office, testified for and against legislation to control how credit card issuers market to college students.
Benjamin Lawsky, deputy counselor and special assistant to Cuomo, said the attorney general is aggressively investigating whether credit card marketers have offered payments to colleges in exchange for exclusive access to students and personal information, such as their e-mail addresses and phone numbers.
"There are highly lucrative, somewhat secret, exclusive marketing agreements at the schools with the credit card companies," he said.
U.S. Public Interest Research Group, a consumer advocacy organization, earlier this year released a survey of 1,500 students at 40 colleges in 14 states in which nearly two in three students reported that they had at least one credit card. Fifty-five percent of cardholding students said they used their card for day-to-day expenses while nearly one-quarter said they pay their tuition with it. On average, those freshmen whose parents were not helping them with their bills had a balance of $1,301. Seniors had more than twice that, $2,623.
Nellie Mae, a student loan company, gathered similar data when it did a study of undergraduate credit card use in 2004. Seventy-six percent of undergraduates began that school year with credit cards, and the average balance was $2,169, lower than it had been in 2001. New numbers are expected later this spring.
Kenneth J. Clayton, senior vice president of the American Bankers Association, disputed that students handle credit cards poorly.
"Students handle credit as well as, and in some cases better than, the general adult population," he testified. "Banks have a vested interest in ensuring that the student's experience is a positive one, as the bank wants to build a productive, lifelong customer relationship that benefits both parties."
Maloney has introduced the Credit Cardholders' Bill of Rights, which would crack down on a number of deceptive credit card practices.
Please email us to report offensive comments.
Posted by: jax08 | July 3, 2008 12:37 PM
Posted by: sh | July 11, 2008 2:24 PM
The comments to this entry are closed.