PRESS RELEASE

EMBARGOED FOR RELEASE: CONTACT: 10:00 AM, Thursday Liz Hitchcock or Ed Mierzwinski September 17th, 1998 202-546-9707 SURVEY FINDS CREDIT CARD INDUSTRY TARGETS STUDENTS Meanwhile, Industry Bankruptcy Bill To Recover More Credit Card Debts Pending In Senate; -- Tips Issued for Students -- Students who obtain credit cards at on-campus tables carry larger balances and pay off their cards later than those who do not, according to the results of a nationwide survey of college students released today by the U.S. Public Interest Research Group (PIRG). The group issued a new fact sheet for college students and also called on colleges to regulate credit card marketing on campus and do a better job of educating students about credit card debt. "Students, especially those who fill out credit card applications at campus tables in return for trinkets and candy, run the risk of falling into the campus credit card trap," said Ed Mierzwinski, U.S. PIRG Consumer Program Director. "Students, often without jobs and often facing large student loan and other school debts, should be careful not to make things worse by running up unnecessary, high-cost credit card debt, since they risk ruining their credit records if they fail to pay on time." "Meanwhile, the credit card industry has poured millions of dollars into a campaign to get Congress to make it easier for them to collect unpaid credit card debts from the bankrupt victims of their high-pressure marketing of high-interest credit cards,ä Mierzwinski added. "Instead of approving the special interest, so- called bankruptcy reform bill on the Senate floor, the Congress should impose tough sanctions on misleading and deceptive credit card marketing." ãTo avoid becoming the next victims of the industryâs sleazy marketing of over-priced cards, students who desire credit cards should obtain them when they can afford them and should get them based on the best interest rate terms," added Mierzwinski, "They shouldn't apply for a credit card just to obtain a frisbee or free-bee or bottle of soda at a campus table." Among the national results of "The Campus Credit Card Trap," a spring 1998 survey of 1260 undergraduate students at 15 campuses were the following: STUDENTS WHO HAD OBTAINED CARDS AT CAMPUS TABLES HAD MORE CARDS AND HIGHER BALANCES THAN THOSE WHO HAD NOT. Students responsible for their own cards who obtained cards at campus tables had more cards (2.6) than those who had not (2.1) and had higher unpaid balances ($1039) than those who had not ($854). More students responsible for their own cards who obtained cards at campus tables reported carrying unpaid balances (42%) than those who had not (35%). Those students responsible for their own cards who had obtained cards at campus tables and carried balances had higher unpaid balances ($1460) than those who had not ($1206). CREDIT CARD MARKETING ON CAMPUS: Students reported obtaining gifts ranging from T-shirts and Frisbees to coffee mugs, slinkees, and candy or bottles of soda in return for filling out applications at tables. According to students, campus groups sponsoring the tables often receive either flat fees or per-application payments from the credit card companies as well. More than half of students (61%) responsible for their own bills reported they had obtained cards at campus tables while fewer than half of those who reported that their parents helped with payments (41%) obtained cards at tables. MOST STUDENTS ARE RESPONSIBLE FOR THEIR OWN CARDS Most students surveyed (69%) obtained credit cards in their own names, while the others (31%) said that their parents either paid their primary credit card bills or co-signed at least one of their cards. Of those who obtained cards in their own names, only 15% reported holding a full-time job when they applied. Thirty-eight percent (38%) of the students responsible for their own cards report paying their balance off each month. Thirty-six percent (36%) pay ãas much as they can.ä However, the remaining students responsible for their own bills -- more than a quarter of the total -- report that they pay either the minimum only (16%) or pay late (9%). Overall, students responsible for their own cards had average unpaid balances of $968; however, students who reported carrying over a balance had unpaid balances of $1,366. CREDIT CARD EDUCATION INADEQUATE Only 41% of all students found credit card education materials "helpful" or "somewhat helpful." Over one-quarter of students (26%) found introductory "teaser rates" misleading. When asked how long it would take to pay off a $1,000 credit card debt at an 18% Annual Percentage Rate (APR) and only making the minimum required payment of 3%, only 20% of all students guessed the correct answer, six years. While 79% of all students reported using credit cards for multiple purposes, from campus expenses to shopping, only 13% reported limiting credit card use to emergencies. According to figures from the Department of Education, the amount of money borrowed by students increased by 11% last year, totaling over $38 billion. PIRG's Higher Education Project estimates that with continued increases in student borrowing, the average student borrower entering school this year will graduate with approximately $20,000 of student debt. "With credit card debt stacked on top of student loan debt, these results should be alarming for students, parents and educators." said Ivan Frishberg, Director of PIRG's Higher Education Project. The PIRG report called on colleges to regulate campus credit card marketing and do a better job of educating students about credit card and other debts. Among PIRG's recommendations were the following: Colleges should prohibit credit card companies from offering trinkets to students for filling out applications unless the student has first read a credit card education brochure prepared by either the college or a non-profit credit education organization. Colleges should include credit card and debt education materials in brochures inserted in bookstore shopping bags. Credit card and debt education and counseling sessions should be made a regular part of campus programming, including new student orientation programs. Colleges should review and consider limiting the total number of credit card tables allowed on campus each semester. Along with the report, PIRG released a new fact sheet for college students, with tips on avoiding the credit card trap. Among the fact sheet's recommendations to students: Study the benefits and risks of credit card debt before you apply. If you decide you need a card and can handle it responsibly, then consider the following: One national credit card is all you need to help you build a credit record, if you pay it off on time. You can build a credit record without carrying an unpaid balance. If you must carry a balance, always pay as much as you can afford, every month. Never pay only the minimum balance, or you'll have trouble paying down the card. PIRG also urged Congress to enact legislation, such as HR 1975 (Joe Kennedy-D-MA) to rein in unfair credit card marketing practices. However, PIRG condemned bankruptcy legislation, S. 1301, proposed by Mastercard and Visa, that is under consideration on the Senate floor this week. An even more one-sided companion bill has already passed the House. "Responsible use of credit cards can help college students build a credit record that will help them get car loans and mortgages after they graduate," concluded Mierzwinski. "But it is up to students to protect themselves from unwise credit card debts, because no one else will." PIRG student volunteers asked students with credit cards to fill out surveys in student centers in the spring of 1998 at a representative sample of 15 college campuses nationally, including large and small, public and private, 4-year residential and 2-year community colleges. -30- U.S. PIRG is the national lobbying office for the state Public Interest Research Groups. PIRGs are statewide, non-partisan, non-profit consumer and environmental watchdogs with members in communities and on college campuses around the country.

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