by Bryan Gibel
Daily Lobo
Student R.J. Nicks said he fell into thousands of dollars of credit card debt after he was offered a deal that seemed too good to be true.
"The way they explained it to me, I could use the card for 18 months with no interest - like it was cash," Nicks said. "Later, I found out they were charging me an interest rate if I wasn't shopping at stores that were approved."
Nicks and other volunteers for New Mexico Student PIRG approached students in Smith Plaza on Wednesday and Thursday to warn them about credit card debt.
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They dressed up as representatives of a fake credit card company and offered students free gifts, a tactic many card companies use, said student Thierry Milleret, a volunteer for PIRG.
"Credit card companies are taking advantage of students, and that's not fair," Milleret said. "We're trying to show how ridiculous their scams are when they talk to students."
Most college students are smart enough to see through the promotions that credit card companies use on campuses, so PIRG's campaign is ineffective, said John Hall, a spokesman for the American Bankers Association.
"We agree with them that there is a need for credit education on university campuses, but they don't give students enough credit for being able to turn down an offer strictly for a freebie, like a T-shirt or a meal," Hall said.
Staying out of card debt is simple, he said.
"There are two things that credit card companies require," he said.
"That's to pay on time and not go over your limit. If you follow those two things, you'll never have a problem."
The average student faces $4,000 of credit card debt by the time they graduate, said student Chris Smith, a coordinator for New Mexico Student PIRG.
One quarter of students say they have used credit cards to pay for tuition and books, he said.
"That's one of the reasons credit card companies target students," Smith said. "They know they have big bills and not a lot of income, so they'll be revolving clients who are constantly paying interest."
Smith said students should be wary of offers that advertise fixed or low-interest rates.
"If you see a card with zero-percent interest rates, it's never going to stay like that, because they won't make money," he said. "When they say an interest rate is fixed, that's not true. They can change it after 15 days, which is in the fine print when you sign up."
Students should stay away from "universal default," Smith said.
"If you are late to pay a phone bill or inquire about a car loan, it lets them raise your interest rate," he said. "A lot of contracts include a clause about universal default. If you see that, you want to avoid that card."
Card companies also take advantage of students by changing payment deadlines so they can collect interest, Smith said.
"If a card doesn't have a fixed due date, they can move it forward and then collect late fees if you don't pay on time," he said.
He said many card companies advertise new deadlines in fine print, so students are unaware of the change.
In addition to educating students, PIRG will ask University administrators to prohibit credit card companies from aggressively targeting students at UNM, Smith said.
"That way, card companies won't be able to use free gifts and other traps to entice students into a long-term commitment," he said.
Nicks still pays interest on his debt, but he hopes his efforts with PIRG will make students more careful when they are approached by card companies.
"Every time I talk to somebody, I'll give a little bit of my history," he said. "It makes people more aware so that when they do sign up for a credit card, hopefully they'll ask questions."
