Students and credit cards

Thank heavens for the Credit CARD Act of 2009. Not only did it stop credit card companies from employing all sorts of dubious marketing practices to lure students into signing up for cards they didn’t need, but it also says that those who are under 21 years old can only get a card if an adult co-signs the agreement–unless, that is, the youngster can prove that he or she has enough independent income to make repayments unaided. Parents across America heaved a collective sigh of relief when that law was passed.

But they sighed too soon. This is credit card regulation. And that means, of course, that no loophole goes unexploited. So it’s no surprise that some card issuers’ armies of lawyers have already circumvented the law.

Credit card regulation fails again

When the act was signed, consumer advocates begged the regulator, the Federal Reserve (who else?), to define what constituted an “independent ability to make required minimum payments.” It refused. And they asked it to force companies to verify whether or not students making credit card applications really had the resources they needed to support the card. It turned down that one too.

So at least one big bank says that it will issue credit cards to students under 21 years old if they have an annual income of…$2,000 or more. And it will count parental contributions, grants, and scholarships when it calculates that income. Oh, and it won’t ask for any proof.

Adam Levin, who used to be director of the New Jersey Division of Consumer Affairs, told The Washington Post, Friday, that, before the Credit CARD Act: “If you were a student and you could fog a mirror, you could get a credit card.” It looks like nothing has changed.

Student credit cards–some responsible ways forward

Assuming that you’d prefer your beloved offspring not to be lured into a debt trap, your first step is to avoid telling her or him about this loophole. What, you’ve never covered up an uncomfortable truth for a good reason before?

Then act as if the law is working just fine. If your child is financially responsible, you could offer to co-sign a credit card application for a specialist student product, such as the Citi® Dividend Platinum Select® Visa® Card for College Students or the Discover® Mix Tape Student Card.

However, you risk your own credit score taking a ding if the fruit of your loins defaults. So, if you think there’s a real chance of that happening, you could opt for a secured credit card, such as the Public Savings Bank Secured Card. These require a deposit to be paid up front (think of it as a security deposit on an apartment rental), but have the advantage of allowing youngsters to build up their own credit scores while keeping them well away from yours. Just make sure that the card you choose reports to all three of the big credit bureaus.

Of course, the safest route is to opt for a prepaid card. These don’t report activity to anyone, and shouldn’t allow a student to access any credit at all. But some of them have very high fees, so shop around. A good choice for many is The Mango™ MasterCard® Prepaid Card.

Credit Card Debt Down–Yet Again

Let’s start with the good news. The Federal Reserve published Friday its latest statistical release about consumer credit. The figures, which relate to June, show that “revolving credit” (nearly all of which is credit card debt) was down again that month, and now stands at $826.5 billion. Out of the last 21 months, according to the Los Angeles Times, this form of debt has fallen 19 times.

Given that the Fed reckons that outstanding revolving credit stood at $958.1 billion in 2008, that means that Americans have paid back about $131.6 billion to credit card companies in two years, right? Wrong. As this column has pointed out previously (and the Philadelphia Inquirer confirmed last month), a large proportion of the reduction is accounted for by “charge offs”, which is what the industry calls debt that it writes off because it’s uncollectible and passes to collection agencies.

In fact, the Inquirer says that, in the first quarter of 2010, about 40 percent of the apparent reductions in credit card balances was actually accounted for by charge offs. And some think that’s a conservative estimate. Still, if you make the assumption (and statisticians are likely to abuse you if you do) that 60 percent of the last two years’ reductions were genuine pay downs, that still means that Americans have paid off their credit cards to the tune of nearly $80 billion.

Credit Reports and Children

At least your young children don’t have to worry about their credit card debt and credit reports, do they? Again, the answer, regrettably, is a qualified Wrong. Because, last week, a number of newspapers covered a story about the growing incidence of people stealing children’s identities, and running up debts in their names.

This grizzly trend is apparently enabled by the current social security number (SSN) system. Apparently, criminal gangs now use a combination of public sources and online trawls to identify SSNs that currently have no credit record attached to them. They can then steal that identity in order to borrow money.

Of course, children’s SSNs generally go unused for at least 16 years, which makes them especially vulnerable to this crime, and the Christian Science Monitor says that seven percent or more of all identity theft cases that are reported affect these youngsters.

If you’re tempted to check your kids’ credit reports, the Monitor cautions that you might be making things even worse. In doing so, you could create a credit file in their names, which may make them even more vulnerable to identity thieves.

Credit Scores and College

What if your son or daughter is off to college, and has a credit card application turned down because of identity theft? Well, the first thing is to report it, and the web sites of both the Identity Theft Resource Center and the Federal Trade Commission provide advice about what to do.

However, it’s likely to take some time to resolve the matter, and during that period, you may have to:

• Issue an authorized card in his or her name on one of your own accounts, which may–depending on the child–involve a leap of faith too far, or
• Find one of the better secured credit cards, which requires a deposit, but could count toward building a credit score while the identity theft is being sorted out, or
• Source a good prepaid credit card, though you need to be careful about high fees with these

Among the best of the last two types of product are:

1. Secured credit cards: Public Savings Bank Secured Card
2. Prepaid cards: The Mango™ MasterCard® Prepaid Card

Credit Card Debt Doesn’t Only Happen to Bad People

There’s a lot of moralizing that goes on about credit card debt, and people who have been smart enough to avoid it often look down their noses at those who’ve got themselves into deep trouble. So it was refreshing to read Trent Hamm’s “confessional” piece in the Christian Science Monitor last Friday.

Trent, who’s clearly neither bad nor unintelligent, described how he left college with “manageable” credit card debt, but found himself a few years later owing $20,000 on his cards. The monthly repayments on that were costing him more than his rent, and he had reached a point where he simply couldn’t satisfy all his creditors. He’s turned things around now and acknowledges his mistakes, but his explanation for his experience illustrates how human–rather than immoral or stupid–his actions were:

Why did I buy? There was a mix of things going on. Poor impulse control. Career-related anxieties. Lots of stress. All of these things were solvable on their own and buying things I couldn’t afford was merely a short-term salve for them. It was easy to forget that pain if I could go home and read a new book or play a new game for a while.

Credit Card Use Overseas

Yesterday’s Seattle Times explored the difficulties that Americans often face when trying to use their credit cards abroad. Banks in many countries (across western Europe, but also elsewhere) stopped relying on magnetic strips for swiping credit cards many years ago. Instead, their cards contain a microchip, and customers never sign for transactions, instead typing their PIN into a keypad.

This undoubtedly reduces queues at check-outs because it’s a faster process than swiping and signing. It also has some security benefits, partly because it’s supposed to be inherently safer (though not perfectly so), and partly because you never need to lose sight of your card. In a restaurant, for example, your waiter brings a portable terminal to your table and conducts the transaction there.

This is all very well, but what happens to Americans, who don’t have chips in their cards? Well, in theory, outlets should print off a slip and allow you to sign. But some smaller ones don’t. And automatic machines that sell tickets, gas, highway tolls, and so forth simply won’t work. So if you’re travelling overseas (and Canada and Mexico are both introducing “Chip and PIN” at the moment), your credit card use could be affected and you probably should carry more cash than you usually would.

Student Credit Cards

Last week (July 19), the Index Credit Cards news blog mentioned a number of student credit cards that could suit those who will soon be off to college. Today’s Detroit News raised an additional point on the subject that’s worth repeating.

If you’re not convinced that your son or daughter is yet ready for his or her own credit card, then you could always order an additional card for him/her on one of your accounts. Of course, the trouble with this is that your offspring could go off on a spending spree with your credit limit.

However, people with American Express charge cards can set (and later change) individual spending limits on each of their additional cards. Now, try that on your husband/wife/partner, and you may well find that the consequent cost of couples counselling outweighs any savings on your card bills. But use it on your son’s or daughter’s additional card, and you can prevent out-of-control spending, while still being able to up the limit in an emergency.

If you’d like to to have the ability to help manage your child’s student spending, then check out the American Express® Preferred Rewards Gold Card, or other American Express cards that offer this functionality.

You could find the best credit card news you’ve seen in ages.

Credit Card Regulation to Tighten?

Last Thursday, the U.S. Senate followed the House’s earlier lead when it passed the new financial reform bill. The law now goes to the President for signature, but some are warning that it could be years before credit card users see much benefit.

Certainly, banks and other card issuers were worried that this new round of credit card regulation could hurt them. A New York Times editorial last Thursday reported figures from the Center for Responsive Politics that estimated that $600 million had been spent by the financial sector in attempts to weaken the bill’s provisions. Of course, the law covers a great deal more than just credit cards, and much of that money would probably have been spent lobbying against other measures.

What’s New?

From the point of view of credit card companies and their customers, the key part of the new law is the creation of a new consumer financial protection bureau. The Times thinks this is a great step forward, saying in that editorial:

The new consumer financial protection bureau established in the bill is a milestone, not only for its intent and power to rectify lending abuses, but because it will institutionalize the insight that the safety and soundness of banks cannot–and should not–be measured by profitability alone, but by the impact that bank practices ultimately may have on consumers.

However, others are less optimistic and some say that the new bureau’s effectiveness could depend on the will of those who run it to take the consumers’ side against the banks. Given that many executives are expected be brought in from existing financial regulators that have less than heroic track records when it comes to this, those with credit cards should, perhaps, not hold their collective breath.

Some Specifics

Supporters of the legislation hope for two principal outcomes:

1. Greater clarity across the board–from the credit card application and agreement through to statements and notices of changes.
2. Agility on the part of the regulator to close abusive loopholes (without the need for new legislation) as soon as credit card issuers begin to exploit them.

Critics say that it could eliminate many of the existing differences between credit card offers, thus closing down much of the competition that currently exists between issuers.

Student Credit Cards

This is the time of year when those who are heading off to college for the first time, and who have yet to apply for credit cards, should begin to research the market. The Credit CARD Act of 2009 has added extra protections for young people (see IndexCredit Cards’ news items), but nobody should think that’s a reason to take less seriously the task of finding the right fit between card and kid.

If you’re a parent with offspring who are in this position, you now have much more control over the choices made than you used to. You need to decide whether you think your son or daughter would be better off with a prepaid card, a debit card, cash, an authorized user card on one of your accounts, or a full-blown card of his or her own.

If you decide on the last of those (and do your research before you reach any conclusion), you may find it worthwhile checking out the following four student credit cards, which have been designed to enhance college life:

• Citi ForwardSM Card for College Students
• Citi® Dividend Platinum Select® Visa® Card for College Students
• Discover® Mix Tape Student Card
• Discover Student Open Road

Credit Score Tightening

Yesterday, TransUnion, one of the big-three credit bureaus, unveiled an enhanced form of credit score that could make it more difficult for some Americans to obtain credit cards. According to TransUnion, credit bureaus traditionally calculate credit scores using four main forms of historical data:

1. Past delinquencies
2. History of responsible use
3. Debt level
4. Utilization (the proportion of your credit limits that you actually use)

However, the company is now able to offer–in partnership with ID Analytics–a fifth dimension based on people’s “stability.” And it claims that this additional perspective can, in some circumstances, reduce bad credit decisions by up to 46%.

Credit Card Debt Problems Down Again

Also yesterday, Moody’s Investor Services published its monthly survey of credit card charge-offs, which is industry jargon for the balances that credit card companies write off because they think the debts have become noncollectable. That doesn’t, of course, mean that nobody will try to retrieve the money; anyone whose balance is charged off should expect to hear fairly soon from a collection agency.

The first bit of good news is that Moody’s says that charge-offs on credit cards in May fell for the second month in a row. Jeff Hibbs, an analyst with Moody’s, says that the company believes that “…credit card charge-offs have passed their peak levels of this credit cycle.”

Credit Card News–Things Are Getting Even Better

The second piece of cheerful credit card news to arise from the Moody’s report concerns delinquencies, which are overdue payments on balances that are yet to be written off. In May, these fell to their lowest level since November 2008. Early stage delinquencies (accounts overdue by 30-59 days) were even healthier, and the company says: “The rate is approaching its historically low ranges of 2006-7.”

All of this suggests that fewer Americans are getting into trouble over credit card debt. And that has to be a welcome thought for card holders, credit card companies, and anyone who cares about the health of the U.S. economy as a whole.

Prepaid Credit Card Swipe Fees to Be Unregulated?

Regular readers may recall that legislators on Capitol Hill are currently deciding whether to regulate “swipe” (or “interchange”) fees, which is the cut taken by credit card companies and payment networks every time a merchant swipes a card. A House-Senate conference is currently hammering out the details, but it appears that lobbyists have won a concession over plans to limit swipe fees on prepaid credit cards–as they’re oxymoronically called.

Earlier today, the Washington Post reported that the conference had decided not to regulate these fees, mainly because to do so could harm poor users who often receive state benefits through fee revenue. If swipe fee revenues are reduced, issuers might make up the difference with higher fees for users.

Credit Card Use Without the Credit

As discussed in previous columns, prepaid credit card use can prove expensive because they often have high fees. However, if chosen with care, prepaid cards can provide a convenient payment method for those for whom traditional credit cards are not appropriate.

One such group is teenagers, and Discover offers a useful product that’s tailored for the young, the Current by Discover Teen Prepaid Debit Card. Other groups include those who cannot–or do not wish to–access mainstream cards. People in that position could check out the ACE Visa Prepaid Debit Card or The Mango™ MasterCard® Prepaid Card.

Credit Card Debt in the Genes

When researchers at the University of California and the London School of Economics teamed up to explore how genes affect some behaviors they came up with a surprise finding. People who have a low-efficiency version of the MAOA gene are significantly more likely to build up troubling levels of credit card debt.

The Spring 2010 edition of LSE Research explains:

The MAOA gene is linked to the neurotransmitters serotonin, dopamine and adrenaline, which, among other things, control mood, heart rate and cognitive ability. How efficient the gene is… influences the chances of someone being impulsive and prone to addiction.

Of course, there’s nothing to stop people overcoming their impulses through sheer willpower, but this remains an interesting insight, and one that may be of particular concern to those parents who have to help their teenage children decide what sorts of plastic (if any) to use when they arrive on campus later this year.

Credit Card Regulation and Students

As yet, there’s no generally available test for the gene, so parents still have to use their common sense to work out whether the apple of their collective eye is one of nature’s hoarders or wastrels. But they should be happy that this year, for the first time, nearly all of them have the power to determine what card their teen will carry. And that’s thanks to federal credit card regulations that came into effect earlier this year.

According to the FDIC, the new rules say that credit card companies:

…will be prohibited from issuing a credit card to a consumer younger than 21 unless he or she submits a written application that includes the signature of a co-signer over 21 or information indicating the young consumer has independent means to repay the card debt.

Before Co-Signing a Credit Card Application

If you’re a parent in this situation, you should think twice before co-signing a credit card application. Of course, if your son or daughter is great with money then the risks are low, and the benefits (in terms of the child building up a credit report early) considerable.

But beware. If your youngster can’t keep up with payments, credit card companies expect you to settle in full, and any delinquencies display on your credit report.

If you have concerns about your kid’s financial self-control, you should consider refusing to co-sign, and instead:

• Insist on a debit card (but don’t opt in for overdraft cover)
  
• Add the child as an authorized user on one of your credit cards (piggybacking)
• Make the teen use a pre-paid card (but shop around, because fees vary hugely)

Student Credit Cards–Some Smart Choices

Discover Bank has a whole wallet-full of different credit cards specifically created for students. It may be worth looking at them, but it’s probably best to start with the Discover® Student Card, which is understandably a favorite. Right now, it’s offering unlimited cash back rewards, an introductory zero percent APR for six months (followed by a sensible, risk-based rate), special cash back bonus schemes, and cool card designs, all for no annual fee.

Meanwhile, the Citi® Dividend Platinum Select® Visa® Card for College Students has similar but slightly different terms. To start with, you get a seven-month zero-percent APR introductory period. The card comes with 5% cash back rewards for 6 months on eligible purchases at convenience stores and supermarkets, gas stations and drugstores, and even for utilities and cable. After the initial 6 months, the reward is 2%, which sounds like a good deal.

Other student credit cards from these banks that are worth exploring include:

• Discover® Student Cards Monogram Collection
• Citi ForwardSM Card for College Students
• Discover® Mix Tape Student Card

Credit Card Debt

As reported here last week, it’s becoming increasingly clear that credit card debt remains a serious problem for many millions of Americans. So yesterday’s advice from Keloland Television should prove timely for many readers. It suggests that, if you’re struggling to pay down your credit cards, you should:

• Budget even more carefully than usual so that you know precisely how much you have to spend.
• Look for ways to cut costs and/or boost income, perhaps with a second job.
• If possible, stop charging altogether, but certainly try to avoid adding to balances.
• Call your credit card companies. Be honest about your problems and ask for lower rates.
• Look at the options provided by balance transfer credit cards with a zero or low rate.

However, Keloland Television warns about a catch with many balance transfer credit cards: “If you don’t have the whole balance paid off at the end of the transfer period then you’re charged interest from day one on the whole balance.”

The report also advises that you list the balances outstanding on all your cards. Then, pay the minimum on them all, and, say, an additional $25 a month (or whatever you can afford) on the smallest. Once that’s paid off, pay off the next smallest balance using the $25 or whatever, plus the minimum payment you no longer have to make on the first account. Carry on until all balances are zero.

Credit Card Rewards Programs

Also yesterday, the Los Angeles Times provided advice for those who use credit card rewards programs. It warned that many of these are being watered down, and companies are introducing or hiking fees. And it recommends reviewing your rewards as follows:

• If you use your rewards for flights, try to concentrate your flying with a single airline partnership alliance
• Think about transferring miles between programs
• Consider swapping to a hotel program or cash-back credit card because points with these are often easier to redeem

Student Credit Cards

Recent credit card regulation has tightened up the rules surrounding cards and young people. Perhaps most importantly, credit card companies are no longer allowed to issue cards to anyone under 21 years old unless that person can prove that he or she has the independent means necessary to make payments or can find an adult to co-sign the credit card application.

Although many welcome this and other rules as a valuable way to prevent naive and inexperienced young people from getting excessively into debt, it does bring a whole new set of problems for parents. As the New York Times pointed out last week, they now have to decide whether to:

• Co-sign a credit card application and risk their own credit scores
• Make their offspring an authorized user of one of their own cards and be ready to mop up after them
• Insist their child use cash, a debit card, or a pre-paid credit card and possibly encounter resentment

Each of these has the potential to cause ructions in any family, and the Times suggests that parents should make their choice based on their past experiences with their child. And, perhaps, student credit cards should be reserved for those who have already proved themselves financially responsible.

Credit Card Debt

As reported here last week, it’s becoming increasingly clear that credit card debt remains a serious problem for many millions of Americans. So yesterday’s advice from Keloland Television should prove timely for many readers. It suggests that, if you’re struggling to pay down your credit cards, you should:

• Budget even more carefully than usual so that you know precisely how much you have to spend
• Look for ways to cut costs and/or boost income, perhaps with a second job
• If possible, stop charging altogether, but certainly try to avoid adding to balances
• Call your credit card companies: be honest about your problems, and ask for lower rates
• Look at the options provided by balance transfer credit cards, with a zero or low rate

However, Keloland Television warns about a catch with many balance transfer credit cards: “If you don’t have the whole balance paid off at the end of the transfer period then you’re charged interest from day one on the whole balance.”

The report also advises that you list the balances outstanding on all your cards. Then, pay the minimum on them all, and, say, an additional $25 a month (or whatever the most you can afford is) on the smallest. Once that’s paid off, pay off the next smallest balance using the $25 or whatever, plus the minimum payment you no longer have to make on the first account. Carry on until all balances are zero.

Credit Card Rewards Programs

Also yesterday, the Los Angeles Times provided advice for those who use credit card rewards programs. It warned that many of these are being watered down, and are introducing or hiking fees. And it recommends reviewing your rewards as follows:

• If you use your rewards for flights, try to concentrate your flying with a single airline partnership alliance
• Think about transferring miles between programs
• Consider swapping to a hotel program, or cash-back credit card, as points with these are often easier to redeem

Student Credit Cards

Recent credit card regulation has tightened up enormously the rules surrounding cards and young people. Perhaps most importantly, credit card companies are no longer allowed to issue cards to anyone under 21 years old unless:

1. that person can prove that they have the independent means necessary to make payments, or
2. he or she can find an adult to co-sign the credit card application

Although many welcome this, and other rules as a valuable way to prevent naive and inexperienced young people getting excessively into debt, it does bring a whole new set of problems for parents. As the New York Times pointed out last week, they now have to decide whether to:

• co-sign a credit card application, and so risk their own credit scores
• make their offspring an authorized user of one of their own cards, and be ready possibly to mop up after them
• insist on cash, a debit card or a pre-paid credit card being used, and possibly encounter resentment

Each of these has the potential to cause ructions in any family, and the Times suggests that parents should make their choice based on their past experiences of their child. And, perhaps, student credit cards should be reserved for those who have already proved themselves financially responsible.

Credit Card Regulation Only a Week Away

After what has felt like an eternity, the Credit CARD Act of 2009 finally comes fully into force (except for certain provisions that affect gift cards) on February 22. And few will breathe a bigger sigh of relief than parents whose children have student credit cards.

That’s because credit card companies long ago began to direct their slick marketing techniques toward those on college campuses. Of course, they saw all youngsters as potential new customers who could remain loyal credit card users for decades. But students were particularly valuable because college graduates are more likely than most to be both affluent and, consequently, good credit risks.

Credit Card Companies on Campus

Back at the end of 2008, the New York Times investigated some of the methods that card issuers used to target students. Perhaps the most surprising fact uncovered in the subsequent report was that hundreds of colleges across the country had signed agreements with card companies. In fact, Bank of America alone had 700 such deals in place at that time.

Many contracts contained confidentiality clauses, so their details remain unknown. But the Times found that one university received a dollar for every successful credit card application (as long as the account wasn’t closed within 90 days), three dollars for each card with an annual fee, and half-a-percent of all the retail purchases made using cards that fell within the deal.

The Times quoted a student newspaper editorial from a different university: “…it doesn’t take a giant leap for someone to ask why the university should encourage responsible spending when it receives a cut of every purchase.”

New Protections

As of next week, the new credit card regulations sweep away these cozy deals, along with the ubiquitous tents, and stands that credit card companies used to erect on campuses. Gone too willbe the T-shirts, blankets, sandwich vouchers, and other promotional goodies that card issuers used to exchange for completed credit card applications.

Because the Credit CARD Act not only outlaws these, but also makes it illegal to issue a card to anyone under 21-years old who does not have independent means unless their parent, guardian, or another adult co-signs the agreement. Even then, the adult will have to give written permission before the credit limit on the card can be raised.

Giving Leverage to Parents

This provides parents with some much-needed leverage when protecting their offspring from unmanageable credit card debt. And if those parents believe that their child is unable to take responsibility for a credit card at all, then it allows them to insist that the student use only cash, or a combination of cash and a debit card.

Of course, there are real advantages to having cards for those who can manage them responsibly. Part of one’s credit score is based on the length of one’s credit history. So, for example, college graduates who haven’t had a card could pay more for, say, a car loan when they’re 23 or 24 years old. They might even be declined completely.

Credit Cards and the Young

It’s generally a mistake to see credit cards as instruments of the devil and credit card companies as invariably evil. In the modern world, it can be tough to get by without a card, and many students learn very successfully how to manage their finances during their college years.

But few will mourn the passing of the years that saw credit card issuers regarding campuses in much the same way that the cowboys wearing black hats used to view small, wild west towns. And most parents welcome the opportunity to participate more actively, and (if they have any sense) more constructively in their children’s financial lives.

Student Credit Cards Beneficial…

Earlier this week, the Daily Illini, an independent student newspaper for the University of Illinois, ran a feature about how new state and federal credit card regulation is likely to affect students. Having described the probable impact, the piece went on to observe that “Some students at the University said they think the laws are overprotective.”

And it went on to quote from an interview with Oana Toma, who is a 21-year old sophomore in Engineering. She pointed out that it is not only those who are under 21 who find themselves in trouble with credit card debt. Many much older people encounter similar problems. And she went on to remark:

This is the time we all need to be building credit. We will need good credit to buy a house or a car in the future. A lot of students just use it [a credit card] like a debit card. They are responsible with it, and they monitor how much they are spending.

…But the Drawbacks Are Serious

Of course, Ms. Toma is right to highlight the many benefits that credit cards can bring to students. But others take a sharply different view. They argue that young people, who, by definition, are relatively inexperienced in financial matters, are especially vulnerable to what they see as predatory credit card companies. And a recent study by Gallup for Sallie Mae suggests they may be right.

Sallie Mae’s report, published last April, but based on a 2008 survey, certainly contained some scary statistics:

• Half of all students had four or more cards
• Only 15 percent of freshmen had a zero balance
• The median credit card debt carried by freshmen nearly trebled between 2004 and 2008–from $373 to $939
• The average credit card debt on graduation was $4,100
• Nearly a fifth of seniors had balances totaling more than $7,000
• Sixty percent of students were surprised at how high their balances had grown
• Balances were carried forward–and finance charges paid–by 82 percent of all students surveyed

Student Credit Cards: Some Good Advice

The Consumers Union last August issued advice to students who are considering making a credit card application. It identified seven key rules that can help young people (and, come to think of it, everyone else) to steer clear of trouble:

1. Don’t fall for the credit card companies’ slick marketing campaigns
2. Make sure you can really afford to borrow money with a credit card
3. If you decide to get a credit card, shop carefully and make sure you understand your contract
4. Don’t be tricked by the teaser rate
5. Don’t use your credit card to finance your education
6. Use your card wisely
7. Don’t co-sign for your friends

Whether or not you’re a student, the first step to a happy relationship with your card is to shop around for the best credit card rates.