COLUMN: Credit cards for students still have risky fees, penalties

Whether you’re a freshman or a senior taking your second victory lap, you have a red target on your back and creditors know who you are. Don’t inaugurate the school year with your first credit card without first researching your options and considering the attached responsibility.

“Student credit cards,” or credit cards with low limits offered to individuals with little to no credit, are problematic. These cards have the same penalties as others, but creditors target individuals who are unfamiliar with credit cards and who have a lot of expenses.

The University of Oklahoma was recently profiled in the 2006 documentary, “Maxed Out.” In the documentary, Visa representatives wearing OU T-shirts set up tables on campus and advertised their credit card by offering a free T-shirt to students who filled out an application.

The creditors looked like OU staff and were giving away free merchandise. What sensible college student doesn’t yield to “free?”

Though the Credit Card Accountability, Responsibility and Disclosure Act of 2009 banned outright marketing on campuses, similar predatory practices exist. Providers are still able to obtain students’ addresses, for example.

The CARD Act also stipulates issuers cannot offer tangible gifts like free T-shirts. They can, however, offer gifts like cash back bonuses on qualifying purchases. Last July, a Citi student card offered a $75 statement credit on “back to school” purchases.

Students are still yielding to “free,” just in different ways.

The labeling of student cards is also predatory, implying the card is safer because it’s exclusively reserved for students. This isn’t credit on training wheels.

Issuers offer prepaid cards, which can be just as damaging. The concept sounds great — spend money you already have while building your credit — but when a student is using a card called “BillMyParents reloadable prepaid Mastercard,” how much responsibility is really learned?

I polled 100 random students on the South Oval to gain insight into OU students’ credit card habits.

Of the students sampled, 41 students had one or more credit cards.

Not surprisingly, the older the student, the more likely he or she owned one or more credit cards. Only 35 percent of freshman polled owned at least one credit card, while 55 percent of seniors polled owned one or more.

While my sampling is a microcosm of the university and isn’t representative of the whole, the student response was important.

One student admitted she used her credit card much more frequently than her debit card on all purchases because it was easier.

Others said they avoid credit cards like the plague. One student said he would like to “never own one,” and another said he “stay[ed] away from them.”

This rhetoric is perhaps in response to the grim statistics attached to student credit card use since the introduction of the CARD Act.

A 2009 Sallie Mae study found that nearly one third of students charged tuition to their credit card, and 92 percent of cardholders charged education expenses like textbooks and school supplies. Only 15 percent of freshman had a zero credit card balance.

Discover recently doubled my credit limit on my student card, perhaps because I graduate in May. Since I have a student card, my college graduation date is part of the data entered into my account information.

Getting the credit card is half the battle. Actually, that’s the easy part. Navigating the sea of creditors and dodging fees and high interest rates is more difficult.

Research credit cards before you apply for one and understand creditors aren’t on your side. The more you charge without repaying in full, the more money they’re making.

Kayley Gillespie is a literature and cultural studies senior.

Kayley Gillespie

Kayley Gillespie, literature and cultural studies senior, oversees opinion content for The Oklahoma Daily. She was hired as assistant opinion editor in August 2012. At The Daily, Kayley has worked as a columnist and opinion editor. Kayley is an intern at World Literature Today and the vice president of the publication's Student Advisory Board, a member of the National Society of Leadership and Success and a participant in the National Education for Women's Leadership Institute. She is a native of South Bend, Indiana.

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