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August 08, 2012

LITTLE ROCK - With the start of the fall semester just days away, Arkansas college students face a variety of expenses. For many college students who may also have limited income, signing up for a credit card may be one way to handle the mounting costs of tuition, text books and room and board.

Attorney General Dustin McDaniel issued this consumer alert today to provide tips to young consumers entering the credit market, and also to remind Arkansans of rules regarding credit card solicitations on college campuses.

"Young consumers like college students should proceed cautiously in their selection and use of a credit card," McDaniel said. "What may seem like an easy way out of a financial headache now could lead to substantial long-term problems if consumers reach their credit limits or take out cards with extraordinarily high interest rates."

For years, college students were barraged by credit card marketers on college campuses and at athletic events. The high-pressure solicitations caused many students to take on too much credit burden too soon. This marketing prompted the Arkansas Legislature to enact restrictions on on-campus credit-card marketing in 1999. A decade later, Congress took additional steps to limit the solicitations.

Federal law prohibits marketing of credit cards within 1,000 feet of a college campus or a related event. Jobless students may not be issued credit cards without parental approval. Consumers younger than 21 may be issued a card only if the applicant has a responsible co-signor, or if they can show an independent means of repaying the credit card debt.

The law also prohibits the use of gifts like T-shirts or magazine subscriptions in the marketing of credit cards to young consumers.

For those consumers who are considering applying for a credit card, McDaniel offered this advice for choosing and using a card:
• Though credit card offers may be appealing, avoid accepting too many offers. Having too much credit can lead to unmanageable debt.
• Submit timely payments. Consumers who are more than 60 days late on their credit card payments can face higher interest rates on their existing balances.
• Avoid making only the minimum payment each month. Doing so costs more and it takes much longer to retire the debt.
• Don't run up a balance on a "teaser" rate card. An attractive interest rate offer may be temporary, and the permanent rate may be more than you can afford.
• Think twice about signing up for "over-the-limit" protection. It may sound good, but it can be very expensive, especially on smaller transactions.
• Try to prevent "maxing out" on a credit card. Charging up to the limit is risky and will affect credit scores.
For more information about state and federal law regarding credit cards, or for information on other consumer-related issues, contact the Consumer Protection Division of the Attorney General's Office at (800) 482-8982 or visit