Students Called Credit-Card Prey Parent’S Permission Goal Of Legislation
Trisha Johnson said Tuesday that her daughter, Mitzi Pool, might be alive today if she hadn’t been bombarded with credit card solicitations when she began her freshman year at the University of Central Oklahoma in 1997.
Pool was able to obtain three credit cards without her mother’s permission and racked up $2,500 in debt during her first semester.
On Dec. 1, 1997, Pool called her mother to explain that she was deep in credit card debt and didn’t know what to do.
“The $2,500 credit card debt does not sound like that much to you or I, but for an 18-year-old trying to be an adult too fast, $2,500 is devastating,” Johnson said.
Johnson said she tried to assure her daughter that they would figure out a way to pay the debt when she returned home to Enid, Okla., for a weekend visit.
A few hours later Johnson received a call from police telling her that Pool had committed suicide. Police found credit cards, bills and a checkbook spread out over Pool’s dorm-room bed.
“The credit card companies target these young adults just like the tobacco industries,” Johnson said. “They lure them in and then they have them hooked.”
Johnson and consumer groups want Congress to require credit card companies to obtain a parent’s permission before issuing credit cards to students under 21, most of whom have little or no outside income. Parental permission would not be required if the students can show the credit card issuers that they are financially independent of their parents.
Such legislation may be considered when the Senate takes up a bankruptcy reform bill later this month.
The credit industry worked to defeat similar legislation last year. Visa U.S.A., a major credit card issuer, didn’t take a position on the proposal Tuesday but issued a statement that it is working to educate young adults about responsible credit card use.
“Visa feels it is important that consumers learn to properly manage their finances at an early age,” the statement said.
Stephen Brobeck, director of the Consumer Federation of America, said many students are ill-equipped to handle credit card debt.
“They have never been financially independent, they have modest incomes and they have not received adequate financial information,” he said. “Yet as early as freshman orientation they are bombarded with credit offers from issuers who frequently extend thousands of dollars of unaffordable credit lines.”
One such advertisement offered a Visa credit card to students with this pitch: “Free from parental rule at last. Now all you need is money. Cha-Ching.”
Brobeck said the credit lines all seem “so affordable” to students who are told they only have to pay a minimum monthly payment that is often as little as $10. The problem is with interest rates that can be as high as 20 percent the amount of the debt can quickly grow if only the minimum monthly payment is made.