Posted on 04/07/2009 4:53:36 PM PDT by Diana in Wisconsin
MADISON, WI - U.S. Sen. Herb Kohl warned college students Tuesday to be wary of credit card marketing ploys involving free T-shirts, blankets and food, saying they can lead to mountains of debt.
Kohl spoke to about two dozen students at the University of Wisconsin-Madison, touting a bill that would place new limits on credit cards for college students. He complained about direct-mail offers sent to students and kiosks on some campuses where companies offer freebies to students for signing up.
"Be very cautious," said Kohl, a Democrat. "Don't be enticed by a free sandwich or something. A lot of it is just plain common sense.".
College students' credit card use has been a problem for years. Two-thirds of college students have at least one credit card, according to a survey of 1,500 students by U.S. PIRG, a nonprofit public policy organization. Seniors reported an average balance of $2,623. A quarter of the respondents said they had paid at least one late fee.
Alex Bodaken is a member of UW-Madison's student chapter of WISPIRG, U.S. PIRG's state affiliate, which helped arrange Kohl's appearance. Bodaken told students that some credit cards carry up to 30 percent interest rates, hidden fees and a universal default clause, which allows lenders to raise interest rates if students default on other bills, such as a cable bills.
Lenders prey on poor students who need cash but don't understand how credit cards can accumulate thousands of dollars of debt, Bodaken said.
Sharon Gamsin, a spokeswoman for MasterCard, said banks, not credit card companies, market credit cards. MasterCard has run a program called "Are You Credit Wise?" on college campuses for more than a decade, said said.
A message The Associated Press left Tuesday at the American Bankers Association, which represents the banking industry, wasn't immediately returned.
Kohl introduced legislation in January to limit college students' credit limit to $500 or 20 percent of their gross annual income, whichever is greater. Students also wouldn't be able to get cards whose combined credit limits exceeded 30 percent of their annual income.
Lenders would need parental approval to increase credit limits on cards where parents are co-signers. Creditors would have to verify students' income and couldn't issue multiple cards to the same student.
Kohl introduced an identical measure in 2007, but it never made it to the Senate floor for a vote. His latest attempt is in the Senate banking committee now.
Kohl also has attached the provision on parental approval for credit increases to another piece of credit card reform legislation, tagged the Credit Card Accountability and Disclosure Act. The banking committee has approved that measure, clearing the way for a floor vote.
Brian Casey, a 19-year-old UW-Madison freshman from Racine, called creditors' tactics "immoral."
"It's mainly just a trap," he said.
The news conference got off to a rocky start. When Kohl began to speak, a man leaped up from the front and snatched the microphone from Kohl's podium. He demanded Kohl explain why he voted to invade Iraq and called the senator a fascist with the blood of thousands of American soldiers and Iraqis on his hands.
As WISPIRG organizers shoved the man out of the room, Kohl calmly told students protesters like him can voice their opinions in America.
The man later identified himself as Miles Kristan. He led an anti-war protest in front of Kohl's Madison office in March 2008.
"However," he continued, "I WILL be ransoming your FUTURE as I support President 0bama's Porkulus Spending Bill, but I won't be getting a free sandwich or anything."
Why should King Log care about us peons? He has his millions from his department stores.
His store has credit cards.
I wonder if the interest rates
that they charge are acceptable to
Wisc/PIRG ?
Ha Ha sure..........
My take on this is completely opposite of this dem’s. As a parent, I found the credit card my daughter got when she started college to be an excellent management tool. We were giving her spending money as long as she kept her scholarships, and having her charge everything (and paying it off each month) allowed me to monitor and advise her on spending. As an added bonus, we just checked her FICO for the first time, and, a year out of college, she has a great score.
Like any THING, the credit card (or company issuing it) is not bad - it’s how it’s used by the person in possession of it. It seems like democrats can’t understand that.
Cards are offered that have beautiful pictures of the university on them. Fine. Just be aware that half a percentage point of interest goes to the school. You are donating to the college without knowing about it, in exchange for having a pretty picture to show off with.
HOGWASH!!!! I used a credit card for twenty years and never paid one dime in interest. Ol Herb acts like the cards will take themselves out and charge stuff w/o you knowing.
Heh Herb, how about a speech about PAYING YOUR BILLS ON TIME!!! novel concept.
No matter how many freebies you get for signing up, the balance still starts at $0.
If you are intelligent enough to get into college you should have no problem understanding compounding interest.
Why is this guy talking to them like they are 5 year olds?
Better to have just inherited millions like Kohl did.
Unfortunately, Wisconsin is stuck with Kohl until he kicks the bucket. He’s our own Ted Kennedy here.
Lenders would need parental approval to increase credit limits on cards where parents are co-signers. Creditors would have to verify students' income and couldn't issue multiple cards to the same student.
Too bad the Bank of China and the Bank of Saudi Arabia don't have rules like that. I would like to see Congress's credit limited to 20% of our income and they need to get our approval for a credit line increase.
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