credit card students

							                    AFSA Education Foundation
                    919 18th Street, N.W., Washington, DC 20006
                    Phone: (202) 296-5544 Fax: (202) 223-0321 Website: www: afsaef.org


For Immediate Release                                                      Contact: Lynne Strang
                                                                           (202) 296-5544 ext. 613

           HELPING COLLEGE STUDENTS AVOID CREDIT CARD WOES:
                 Parents Can Play an Important Role, Says AFSAEF

WASHINGTON, August 8, 2000 . . . When college students arrive on campus sometime in the
next few weeks, many will take advantage of opportunities to sign up for a credit card and
receive free giveaways like T-shirts or frisbees. Some of these students will have little or no
experience with managing a credit card.

Parents, however, can help their college-bound offspring avoid uninformed or “spur of the
moment” decisions about credit cards by explaining a few key concepts, says Susie Irvine,
president and CEO of the American Financial Services Association Education Foundation
(AFSAEF). The discussion should cover credit card terms such as the annual fee, grace period
and interest, adds Irvine, as well as the consequences for card users who get themselves over
their heads in debt. Students need to understand that how they manage payments on their first
credit card accounts might affect their ability to buy a car or get a job in the future.

“In addition, parents and their children need to establish a few ground rules in advance about the
credit card‟s use,” says Irvine.

AFSAEF offers the following suggestions for parents and other adults wanting to help college-
bound students use credit responsibly:

      Decide who will be responsible for paying the monthly bills. If the parent is going to
       handle the payments, make it clear what you‟ll pay for and what you won‟t.

      Encourage your son or daughter to compare credit card offers from at least three
       issuers. This includes looking at interest rates and reading all disclosures and
       documentation before applying for a card. “Don‟t select a credit card simply because the
       issuer is giving away a great compact disc,” says Irvine. “Also, it‟s worth pointing out
       that being „pre-approved‟ doesn‟t mean having to sign up.”

                                            -- More –
                                                         College and Credit Cards—Page Two

      Determine how the card is going to be used – whether it‟s for emergencies only, such
       as unexpected car expenses, or for routine purchases. In most cases, there‟s no reason for
       a college student to have multiple cards.

      Create a budget for the semester or quarter. Allocate amounts to be spent on
       fundamentals like food, textbooks and clothing – along with a dollar limit to be charged
       on the student‟s credit card. This amount may be less than the credit limit provided by
       the card issuer.

      Weigh the difference between an individual and a co-signed card. With an individual
       card, your son or daughter has sole responsibility for the payments. If you co-sign, you
       are legally responsible if the account becomes delinquent. Like an individual card, a co-
       signed card‟s monthly statements normally go to the student. However, co-signing
       parents can check payment and bill status any time by calling the issuer‟s toll-free
       customer service line (you‟ll need your student‟s social security number for verification).

      Watch for red flags. If your student comes home at Thanksgiving wearing a new $500
       leather jacket – and has a budgeted credit card limit of $200 – it could mean problems.
       Also, using one credit card to pay off another and having to get a job just to meet credit
       card obligations are sure signs of trouble. Seek credit counseling immediately.

In addition, the following Web sites may be useful:

      The Jump$tart Coalition for Personal Financial Literacy seeks to evaluate the
       financial literacy of young adults; develop, disseminate, and encourage the use of
       guidelines for grades K-12; and promote the teaching of personal finance.
       www.jumpstartcoalition.org

      College Parents of America (CPA) is a resource, advisor and advocate for the more
       than 32 million households with parents of current and future college students throughout
       the United States. www.collegeparents.org

      CreditHealthy.com provides free online credit management services, with an emphasis
       on assisting college students and helping them to proactively keep credit healthy.
       www.CreditHealthy.com

Founded in 1990, AFSAEF develops consumer education materials and sponsors research on
consumer finance issues. It is affiliated with the American Financial Services Association, a
national trade association for market-funded financial services firms providing credit to
consumers and small businesses.
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