Use Credit Cards with Care
August 3, 2016
As summer winds down, college students are headed back to school, which means being faced with additional expenses. For many students, signing up for a credit card may seem like a good solution.
Arkansas Attorney General Leslie Rutledge issued today’s consumer alert to provide young Arkansans with helpful tips when entering the credit market.
“Credit cards are a convenient way to purchase items, however, discretion must be used so that no long-term problems occur,” Attorney General Rutledge said. “Exceeding the card’s credit limit or late payments will negatively impact your credit score. A low credit score will increase interest rates and make applying for loans more difficult.”
For those students who are considering applying for a credit card, Rutledge offered this advice when using a card:
- Submit payments on time. Making regular payments is the best way to improve a credit score and qualify for less expensive credit.
- Always pay the balance owed. Although it may seem easier to pay the minimum, doing so costs more in the long-run, and it will take much longer to pay off the debt.
- Do not “max out” a credit card. Charging the full credit limit is risky, and it will affect a consumer’s credit score.
- Do not respond to every tempting credit card offer. Using too much credit could lead to having uncontrollable debt.
- Read the fine print as some credit cards include expensive annual fees and higher interest rates in exchange for incentives like airline miles and bonus points. Some credit cards offer other services such as lower annual percentage rates, insurance and other items at no cost.
To combat the high-pressure solicitations and students burdened by credit card debt, the Arkansas General Assembly enacted legislation in 1999 that restricts the practice of marketing credit cards on college campuses.
In 2009, Congress passed the Credit Card Accountability Responsibility and Disclosure Act, which restricts on-campus credit card marketing nationwide. Under this law, the marketing of credit cards within 1,000 feet of a college campus or related event is prohibited. Consumers under age 21 must have a written application that includes the signature of a parent, legal guardian or spouse that has means to repay debts incurred by the account.
Credit card marketers are also forbidden from using gifts such as T-shirts and magazine subscriptions to entice a young consumer into applying for a card.
For more information on other consumer-related issues or to file a consumer complaint, contact the Attorney General's office at (800) 482-8982 or firstname.lastname@example.org or visit ArkansasAG.gov or facebook.com/AGLeslieRutledge.